Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1597 - ITAT DELHIEstimation of income - suppression of profit - non rejection of books of accounts - AO applying higher profit rate against the assessee - HELD THAT:- AO in the assessment order has specifically noted that turnover of the assessee in the assessment year under appeal is higher as compared to earlier year, but, there is a substantial decrease in the export sales in assessment year under appeal, as against exports made in proceeding assessment year. These were the relevant factors which should have been considered by the AO while applying higher profit rate against the assessee because the assessee claimed that there was a fall in export because the assessee’s stock was not matching with the standards of the Foreign Buyers and that domestic sales have increased. Therefore, there would not have been any reason for the assessee to suppress the profit. Since the books of account have not been rejected by the AO, therefore, there was no justification for him to apply higher profit rate. The entire history of the assessee has also not been considered in this regard and non-verification of the debtors by itself is no ground to apply higher profit rate because both situation work differently in I.T. Act. The replies filed by the assessee in detail show that details of the debtors were also provided to AO - assessee has agreed to produce books of account before AO, we set aside the orders of the authorities below and restore this issue to the file of AO with direction - Appeal of assessee is allowed for statistical purposes. Addition on account of valuation of stock - assessee has been following weighted average method consistently for the last so many year - AO applied FIFO method - HELD THAT:- The assessee rightly contended that in assessment year the export market of iron ore fines was in a bad shape. The assessee, therefore, rightly contended that Foreign buyers have insisted for best quality of iron ore fines and the stock of the assessee was not matching with the standards of the Foreign Buyers, therefore, the assessee could not sell the iron ore fines in domestic market and due to dust etc., the quantity of iron ore fine have deteriorated further. The explanation of assessee is supported by the fact that there is fall in export of iron ore fines in assessment year under appeal as compared to earlier years. However, the assessee did not produce books of account and other details and production record because of the reasons that the Courier Company could not supply the same at Delhi within a reasonable period. Since, on Ground No.4, the matter in issue have been restored to the file of AO for examination by directing the assessee to produce books of account and other details, therefore, in our view, this issue also requires for reconsideration at the level of the AO - Appeal of assessee is allowed for statistical purposes. Addition u/s 14A - as per AO assessee has made sizeable investments, which yields exempt income to assessee and the investment at the end of year in shares - HELD THAT:- assessee made suo motu disallowance u/s 14A, but, assessing officer did not record any satisfaction as to how the disallowance made by the assessee was unreasonable or unsatisfactory. In the absence of any satisfaction recorded u/s 14A , no disallowance could be made against assessee. Further, assessee has own sufficient funds to make investment, therefore, there is a presumption in favour of the assessee that assessee has used own funds to make investment in shares. Therefore, no addition u/s 14A of the nature could be made against the assessee. We, accordingly, set aside the orders of the authorities below and delete the entire addition. - Decided in favour of assessee.
|