TaxTMI 
TaxTMI 
2026 (9) TMI 679
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....t order dated 19.04.2021 passed u/s 143(3) r.w.s. 144B of the Act pertaining to Assessment Year 2018-19. 2. Brief facts of the case are that the assessee company is engaged in the business of manufacturing and trading of menthol and its related products, declaring total income of INR 4,97,120/-. The case of the assessee was selected for complete scrutiny on the issue of examination of business expenses as there was high revenue from operation and no scrutiny was taken in Five years. The AO asked the assessee to file various details which include the party-wise and month-wise details of purchase and sales. The assessee was further asked to file the details of debtors and creditors and on perusal of the details filed by the assessee of Sun....
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....uditors in the books of accounts so maintained. As per ld.AR, during the course of assessment proceedings, assessee had filed month-wise details of sales and as purchases made. Besides this, reconciliation of the sales as per books of accounts and as per GST return was also filed. The assessee further filed copy of the bank statements, details of creditors and debtors and complete details were filed with respect to the stock maintained. Ld.AR submits that the AO has failed to appreciate these details filed and wrongly invoked the provision of section 145(3) of the Act. As per ld. AR, the AO has failed to appreciate the fact that closing balance of the creditors was inclusive of GST paid on purchases made from them whereas in the purchase ac....
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....t judgment. 8. Ld.AR further placed reliance on the judgment of Hon'ble Supreme Court in the case of CIT vs Orissa Corporation P. Ltd. reported in 159 ITR 78 (SC). wherein it is held that when the assessee has furnished name and addresses of the parties, it is the duty of AO to make further inquiry before drawing inference against the assessee. Further, with respect to the arguments that without pointing out any specific advance rejection of books of accounts u/s 145(3) of the Act, is not sustainable, reliance is placed on the following judgments:- [i] CIT vs Smt. Poonam Rani, 2010 (5) TMI 57-Delhi High Court dated 07.05.2010; [ii] ACIT vs Friends Medicos 2023 (10) TMI 1269-ITAT, Delhi dated 10.10.2023; [iii] D....
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....ough the turnover has increased however, such a lower profit margin cannot be acceptable more particularly, when the assessee itself has given the comparative data where the G.P. ranges from 1% to 5% and G.P. declared by comparable concern namely, Kaizen Organics Pvt.Ltd. was 4.61% and Banwari Aromas Pvt. Ltd. was of 4.53%. He therefore, submits that looking to the comparative G.P. rate, estimation done by the AO is correct and requested for the confirmation of the additions made. 10. Heard the contention of both the parties at length and perused the material available on record. The assessee was engaged in the business of manufacturing and trading menthol and its related products. It is observed that during the course of assessment proc....
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....ncome, it is observed that assessee has declared progressive turnover where the Turnover was increased from INR 7.14 crores in Assessment Year 2016-17 to INR 129.52 crores in the year under appeal whereas the G.P. rate of corresponding period had reduced from 16.88% to 0.87% only. It is further observed that assessee itself filed the results of comparable entities engaged in the similar business namely Kaizen Organics Pvt. Ltd. who had shown G.P. rate of 4.61% and Banwari Aromas Pvt. Ltd. showing 4.53%. Further, the assessee has filed certificate from Essential Oil Association of India alongwith MCX rates for the year under appeal, according to which, G.P. rate ranges from 1 % to 5%. However, in the instant case, G.P. rate was declared at 0....