2017 (2) TMI 218 - ITAT COCHIN - Income Tax

Head Note / Extract:
Estimation of Gross Profit on sale of Food - Held that:- The average gross profit on food sale is only 6.32% as per the impounded documents. The Assessing Officer on the other hand had estimated the G.P. at 13.68% to 12% for various AY’s. The CIT(Appeals) has not gone into the facts and has estimated gross profit rate of 12% on sale of food. The CIT(Appeals) compared with other group concerns on identical business but has not considered the place where these concerns are doing business. The place of business have major role in the food sales and cannot be compared with concerns in different places. Moreover as mentioned earlier, the impounded material clearly points out only G.P. of 6.32% on sale of food. It is also to be noted that liquor sales are the main sales and the food sales is only a secondary sale in all the AY’s. Therefore the percentage adopted at 12% for food sales is erroneous and addition on this count is deleted. Disallowances of expenses - assessee could not produce external evidences for the expenses disallowed - Held that:- Admittedly, the Assessing Officer has stated that the expenses are genuine and supported by vouchers. In such a case the Assessing Officer could not have disallowed the expenses. It is also noticed that the CIT(A) has also not correctly appreciated the facts of the present case. Considering the entire facts and circumstances of the present case, it is of the view, that there was no justification in making the disallowance of expenses. Therefore, delete the disallowance of expenses made by the Assessing Officer and confirmed by the CIT(A).