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2023 (10) TMI 302 - AT - Income TaxAdditions against reduction in Gross Profit Rate (GP rate) - rejection of books of accounts - registered petroleum product dealer - AO asked for the books of account which the assessee could not furnish - HELD THAT:- As the assessee is a dealer of the petroleum company i.e. HPCL, as per the agreement placed on record all the purchases are to be made from the said company and the assessee purchases and thereby make sale of the petroleum product which are controlled at predetermined prices. As per the practice the payments are also to be made in advance before purchase of goods and the assessee is getting the predetermined rate of commission as the sale price is also fixed by the government, we see that there is no scope for the assessee declaring the higher GP or Lower GP. The assessee has no role to play in the purchase and sale price. We even find from the records that while submitting the explanation of the GP the assessee already submitted that the difference is on account of fluctuation in Diesel/Petrol Price and on which there is no adverse finding of the ld. AO. Therefore, since the GP is derived from the purchase and sale price difference and are frequent fluctuating, we see no reasons to reject the books merely on this observation. Not only that the bench also noted that the accounts of the assessee are audited and before estimating the GP the book result declared by the assessee is required to be found but the fault mentioned in the show cause notice is not a defect to be sufficient to invoke the provision of section 145(3) of the Act based on the set of facts made available on records. We find from the records that the assessee was given the specific shows cause notice for rejection of the books and even though the order is passed u/s. 143(3) of the Act and not u/s. 144 of the Act. The assessee has already advanced the reasons for low profit and has submitted the details called, ld. AO only requires the books of account which the assessee submitted that not requirement when the assessment is going on in ITBA and the books are audited. The assessment of the assessee completed u/s. 143(3) of the Act. No specific information was called for and ld. AO only insisted upon the producing of the books of accounts. Since, there is no specific defects observed in the books of accounts the addition made by the ld. AO on account of the low G.P. we see no reason to sustain the same. Hence, the addition made by the ld. AO for an amount of Rs. 4,60,052/- on account of the low G. P. is deleted and the finding of the ld. AO rejecting the book result is not correct. Based on these observations the ground no. 3 raised by the assessee is allowed. Unexplained cash credit u/s 68 - Since, the assessee was not called upon to file any specific information which the assessee contended before us. Once the sales is not disputed the consequential receipt also cannot be particularly when the assessee was permitted to accept the SBN for the specific period. The ld. AR submitted that assessee maintained the day to day stock register under the essential commodity Act. That records are periodically verified by the officials under that Act. Thus, considering the prayer of the assessee for giving a chance and grievance of the revenue to verify the claim of the assessee with the relevant documentary evidence to substantiate the source of the cash deposited. As the revenue did not dispute the sales made by the assessee in the same period, but contended that no explanation regarding these cash deposit with documentary evidences like stock register, sale details, details of SBN and non SBN, purchase bills were submitted. Hence, the bench feels since the sale is not under dispute the assessee should substantiate his version with the documents that has been demanded by the revenue to establish the source of cash deposited. In the light of these discussions, we feel that let ld. AO shall verify the sales vis a vis generation of the SBN with documentary evidence as deem fit to verify the claim of the assessee. Ground no. 2 raised by the assessee is allowed for statistical purposes.
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