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2020 (9) TMI 765 - AT - Income TaxGross profit addition - non rejection of books of accounts - Assessee accepting gross profit @ 56% as per the order of Settlement Commission for immediately preceding seven assessment years - CIT-A granted part relief to the assessee in a non-maintainable appeal - HELD THAT:- Assessee, before the AO during the assessment proceedings, agreed to estimation of gross profit @ 56% of sales/turnover and this act of the assessee obviously stopped the AO from making further enquiry or observations and going deep into the books of account of the assessee and to take recourse of procedure mandated in section 145(3) - assessee cannot be held as aggrieved from such addition which has been made on the voluntary consent of the assessee before the AO during assessment proceedings in the line of the Income Tax Settlement Commission. We safely presume that the appeal of the assessee was neither maintainable before the CIT (A) nor before this Tribunal in view of the various decisions, as relied in the case of Vamadevan Bhanu [2009 (12) TMI 591 - KERALA HIGH COURT] Therefore, in our considered opinion, firstly, ld CIT(A) has admitted and adjudicated the appeal which was not maintainable as per provisions of section 246A r.w. 250 of the Act. CIT(A) held that the action of the AO in estimating the gross profit margin at the figure higher of 56% of sales/turnover than the reported value of 53.88% is not entirely unjustified and same is upheld. Thereafter, the ld CIT(A) after noting the arguments of the assessee recorded hypothetical observation without any basis only based on surmises and conjunctures and without referring to the financial results of the assessee, without referring to ITSC order and voluntary consent of assessee for estimating GP rate @ 56% of sales/turnover and reduced the GPM from 56% to 55% ignoring vital facts supporting the action of the AO. Therefore, in our opinion, ld CIT(A), first of all, admitted and adjudicated the non-maintainable appeal and, therefore, gave relief to the assessee without any justified reason and legal basis tenable under provisions of the Act. AO was right in making addition on the consent of the assessee and keeping in view the order of ITSC for immediately previous seven assessment years by estimating G.P @ 56% of sales/turnover. We also hold that the ld CIT(A) has granted part relief to the assessee in a nonmaintainable appeal without any valid basis, thus, same is not sustainable and thus, we set aside the same.
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