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2019 (5) TMI 742 - AT - Income TaxEstimation of net profit - Rejection of books of accounts - HELD THAT:- Facts of every year are separate and one just cannot apply results of preceding year on the current year but looking to the fact that type of business is the same and there is no future thrust to the assessee’s business as the sales have increased drastically and no evidence have been placed on record to prove as to why there is a sharp decrease in the net profit even when other assessee’s running similar type of business are showning better net profit rate. CIT(A) has referred and relied on judgment in the case of Trilok Chand Girdharilal & Party vs. ITO [2014 (3) TMI 807 - RAJASTHAN HIGH COURT] confirming the action of the assessing officer of rejecting the trading results and invoking the provisions of Section 145(3) as no proper sale vouchers were maintained and fairly estimated the net profit. Hon'ble Court confirmed the view taken by the Ld. AO adopting average gross profit rate which was upheld by CIT(A) and ITAT. We therefore find merit in the finding of CIT(A) calculating net profit rate 2.16% being average of net profit rate declared by assessee for 5 years at 2.77%, 1.33%, 1.54%, 1.77% and 3.5% thereby deleting the addition of ₹ 60,57,651/- Rejection of claim u/s 54B - no evidence placed in support to seek claim - HELD THAT:- The assessee sold land and received sale consideration of ₹ 14,32,000/- thereon. Cost of acquisition of the land and transfer expenses were shown at ₹ 8,14,555/-. The short term capital gain is arising at ₹ 6,17,445/-. The assessee made a claim of exemption u/s 54B of the Act at ₹ 6,17,445/- but no evidence placed in support thereof before both the lower authorities. Even during the course of hearing before the Tribunal assessee has not made any submissions with regard to claim of deduction u/s 54B of the Act at ₹ 6,17,445/-. There seems no reason to interfere in the finding of Ld. CIT(A) confirming the addition. - Decided against assessee. Unexplained unsecured loan u/s 68 - HELD THAT:- During the course of hearing before the Tribunal no other evidences have been put forth by the assessee in order to prove identity, creditworthiness and genuineness of the alleged unsecured loan. We, therefore, find no reason to interfere in the finding of the CIT(A) confirming the addition Unexplained investments u/s 69 - before the CIT(A) assessee filed the details along with proof of taking house loan for the purchase of flat. DR failed to rebut the finding of the Ld. CIT(A) - HELD THAT:- The alleged purchase of flat cannot be categorized under the unexplained investments u/s 69 as the same have been recorded in the regular books of accounts along with housing loan taken for financing the purchase of the flat. No interference is therefore, called for in the finding of the CIT(A) deleting the addition. Penalty u/s 271(1)(c) - estimated profits made by the AO by applying net profit rate of 3.5% on the sales disclosed by the assessee - HELD THAT:- From going through the assessment order it is discernable that AO rejected the books u/s 145(3) for not maintaining quantitative records and sales vouchers. No doubt has been raised for the purchase made by the assessee from the Excise Department. It is well established fact that the assessee engaged in the Liquor contractor business have to prepare regular quantitative details to be furnished to the Excise Authority. The regular stock is taken. No anomaly has been found in the audited books of account. Addition has been made only by estimating profits. No adverse finding has been given for any instances which could prove that assessee has concealed income or furnish inaccurate particulars of income. Levying penalty on the estimated profits was not justified and is uncalled for. Therefore, Ld. CIT(A) has rightly deleted the penalty levied u/s 271(1)(c) on the addition for estimated profits and no interference is therefore called for. Incorrect claim u/s 54B - In the income tax return filed by the assessee inaccurate particulars of income were furnished in order to claim deduction/exemption 54B of the Act. Till the hearing before the Tribunal Ld. counsel for the assessee has been unable to prove with adequate material that claim made was a bonafide claim. The assessee furnished inaccurate particulars of income, making an incorrect claim u/s 54B. AO was justified in levying penalty u/s 271(1)(c) and this action was rightly confirmed by the Ld. CIT(A). Ground no.1 of assessee’s appeal stands dismissed.
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