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2016 (9) TMI 711 - ITAT CHENNAIEstimation of inflation of purchases - addition on the basis of statement collected during survey - Held that:- The assessee has categorically stated that it is maintaining collection centres and payments are made to the farmers from there. There is no third party evidence towards purchase cost of milk legally. Payments were made on the basis of own vouchers which are maintained by the assessee. Though the Assessing Officer estimated the inflation of purchase, he was not able to co-relate those inflation of purchases during the assessment year under consideration. Thus, the estimated inflation of purchases is based on the subsequent years’ figures. In our opinion, the information gathered subsequent to the assessment year under consideration cannot be basis for estimation of inflation of purchases for the earlier assessment year. De horse, without prejudice to the fact that even the statement recorded during the course of survey have no evidentiary value. Any admission during such statement cannot by itself be basis for addition. Being so, in our opinion, the addition on the basis of statement collected during survey cannot be basis for addition. There is a decline in gross profit rate as compared to assessment year 2010-11, 2011-12. The assessee is not able to explain decline on the gross profit at 14.03% as compared to earlier assessment years. In our opinion, to settle the dispute, it is appropriate to take average gross profit rate of assessment years 2010-11, 2011-12 and 2012-13 and to estimate the income of the assessee on the basis of average gross profit rate of last two assessment years since the past history is the best yardstick to estimate the income. Accordingly, we direct the Assessing Officer to recompute the income of the assessee by applying the average gross profit rate of immediate earlier two assessment years alongwith present assessment year and decide the issue afresh. The assessee shall provide details of gross profit rate of all the two immediate earlier assessment years to the Assessing Officer. The Assessing Officer shall consider the same and decide the issue in accordance with our findings as above. - Decided in favour of assessee for statistical purposes.
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