TaxTMI 
TaxTMI 
2026 (7) TMI 1633
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....rcised judicially and is violating the principles of natural justice. 2. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law as the Ld. A.O ignored the business model of the assessee. The books of account were also rejected without having adverse evidence in the possession of the Ld. A.O. 3. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law as the Ld. A.O. added of Rupees 2,25,41,711/-/- to the net profit shown by the assessee by applying NP rate of 6% as against 0.36% declared by the assessee on the declared turnover of the assessee and that too by recording incorrect facts and findings and without observing the principles of natural justice and by disregarding the submissions, evidences and material placed on record by the assessee and without providing the adverse material on record. 4. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law as that the Ld. A.O. has estimated the net profits of the business of the assessee at Rupees 2,25,41,711/-by ignoring the modus operandi of the business of the assessee and also ignored ....
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....ng of the Buffaloes during transit. She had shown a net profit of .36% of turnover, which the ld. AO regarded as very low in this line of business. The Assessing Officer observed that the assessee had not submitted any books of accounts except the trading and profit and loss account and balance-sheet. When she was asked to produce the books, she sought time. Since the further time could not be granted on account of the limitation involved, the assessee was asked to show cause as to why her books of accounts should not be rejected and the income should not be estimated at 8% of the turnover. In response, the assessee submitted that 8% turnover was impossible in this type of business. For this proposition, she relied on the judgment of the ITAT Jaipur Bench in the case of Pappu Qureshi vs. ITO, Ward-4(5), Jaipur where the AO had calculated gross profit @ 5% under section 44AF of the Act against 1.76%, without rejecting the books of accounts and the Hon'ble ITAT had deleted additions saying that the purchase and sale of animals does not technically fall under the category of retail trades of goods and merchandise and the turnover declared was well beyond the prescribed limit under sec....
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.... but these had not been considered. It was not possible to produce affidavits from all the farmers because of the bulky nature, but she generally maintained a separate list of farmers/producers from whom purchases of livestock had been made and there was no reason to doubt these purchases. Furthermore, she had collected identity proof of all persons to whom cash payment had been made against purchases by her and was now submitting the complete details of farmers / producers along with UID/Aadhar number, as well as complete addresses of the farmers. It was further argued that since the purchases had been made directly from the producers of livestock, the assessee was allowed to incur the expenditure in cash in terms of Rule 6DD(e) of the Income Tax Rules, 1962. It was further argued that the case of Pappu Qureshi, which had been presented before the ld. AO, was a comparable case but the AO had failed to consider the same. She also relied upon the decision of the ITAT Chandigarh Bench in the case of New Truck Operators Union, G.T. Road, Doraha 1421 vs. ITO, Ward-4, Khanna in ITA No. 455/CHD/2022 in which the ITAT had held that any estimation without considering the past history of th....
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....ever, the ld. AO had failed to consider all of these and had arbitrarily fixed her profit at 6% after rejecting the books, only because she could not produce them. The ld. CIT(A) had also refused to consider the same books when they were produced by the assessee and also affidavits produced by the assessee from the persons from whom she had purchased the Buffaloes. He had also failed to consider, that in other cases of comparative nature, the profits had been estimated at a far lower percentage and in line with the assessee's business results. Accordingly, it was prayed that the action of the ld. CIT(A) was highly arbitrary and the assessee should be given one more opportunity to demonstrate that the profits that had been brought to tax in her hands, were excessive. 6. On the other hand, Sh. Amit Kumar, Sr. DR (hereinafter referred to as the ld. DR) pointed out that Rule 46A lays down certain conditions for admission of additional evidence and the assessee could not show the ld. CIT(A) as to why this additional evidence should be admitted. This was not a case where the ld. AO was preventing her from producing the additional evidence. Nor was there a case where she could not have....