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2015 (10) TMI 2117 - AT - Income TaxEstimation of income - method adopted by Assessing Officer of evaluating G.P. on the basis of G.P. ratio of the previous two years - AO rejecting the return of income filed by the assessee and disregarding the book result shown therein and estimating the income under the head 'business' at ₹ 57,95,266/- as against the loss of ₹ 18,74,33,043/- as shown by the assessee in the return of income filed - CIT(A) deleted the addition - Held that:- Details of party-wise sales and purchases made during the assessment year were also filed. Some confirmations of sales and purchases were also filed containing requisite particulars of the parties concerned i.e. name, complete address, PAN etc. The assessee also filed detailed note of justification for the loss suffered in business by the assessee during the year under appeal along with corroborative evidences and also citing the comparable case of other assessees having similar business and having suffered similar losses in the same year. In support of its claim of destruction of records due to water loging in the business premises caused by heavy rains on 8th July, 2009, the assessee filed affidavits and police complaint and copy of newspaper report. The Assessing Officer did not make verification of any of these documents, but disbelieved the same without bringing anything contrary on record. With regard to justification of the loss, the assessee had submitted evidences showing that the rate of Nickel (the main ingredient of non ferrous metal traded by the assessee), crashed consistently throughout the year and came down from ₹ 30,000/-per M.T. in April 2008 to ₹ 9,000/- per M.T. in March 2009, registering steep fall of more than 70%. The assessee had filed evidences in the form of quotations from London Metal Exchange, in support of his assertion. It was submitted that most of the sales have been shown by assessee out of the opening stock held, and all the purchases were made in the earlier years at higher rate prevailing at that time. Due to the aforesaid steep fall of more than 70% in the rate of goods traded by the assessee, gross loss was incurred by the assessee. The documentary evidences submitted, the details of which have been reproduced in this order above, would show that on the basis of these documentary evidences, the Assessing Officer could have very well satisfied himself to clear any doubts. During course of hearing, ld. D.R. could not bring anything contrary on record to controvert these facts, he could not point out anything wrong in the aforesaid documentary evidences submitted by the assessee before the Assessing Officer as well as before the CIT(A). In addition to that, assessee has also given justification for incurring loss during the year due to the reasons which were beyond his control i.e. a drastic crash in the global market, world over. None of these facts have been controverted by the Assessing Officer in the assessment proceedings or by Learned Departmental Representative at this stage. Thus ld. CIT(A) correctly deleted the addition made by the Assessing Officer. - Decided in favour of assessee.
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