TMI Blog2014 (1) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be considered on the basis of TDS certificate - The Assessing Officer could have verified the same from ICICI Bank (the payer) and only after finding that the same was found undeclared by the assessee, the additions could have been made and the Commissioner of Income Tax(A) deleted the additions - The Assessing Officer should have been given an opportunity to verify the amount shown by the assessee and shown in the TDS certificate issued by the payer ICICI Bank but the Commissioner of Income Tax(A) has decided the issue in favour of the assessee without any verification - The issue was restored for fresh adjudication. Interest u/s 234B - Held that:- The issue was restored for fresh adjudication with a direction to AO to decide the issue of levy of interest on the assessee u/s 234B of the Act by considering the result of above ground. - I.T.A. No. 3350/Del/2010, I.T.A.No.3216/Del/2010 - - - Dated:- 20-12-2013 - Shri G. D. Agrawal And Shri Chandra Mohan Garg,JJ. For the Appellant : Shri Raj Kumar, CA For the Respondent : Shri Sameer Sharma, Sr. DR ORDER Per Chandramohan Garg, Judicial Member The above captioned appeals have been preferred against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he P L account of the assessee without any basis and cogent reason and maximum heads of rejected claim were allowed during the earlier and subsequent years of the assessment. 6. The AR vehemently contended that when the Assessing Officer rejected the declared and returned income of the assessee, the estimation of net profit has to be done on the basis of declared N.P. rate for the preceding and subsequent assessment years but the Assessing Officer disallowed 94.64% expenses claimed by the assessee on wrong premise and without any basis. The AR further contended that the Commissioner of Income Tax(A) estimated the NP at 15% of the receipts on the basis of result of AY 2005-06 which were actually showing NP of 9.23% of the receipts. The AR also contended that if the Commissioner of Income Tax(A) has chosen to estimate net profit on the basis of percentage of receipts based on result of AY 2005-06, then the Commissioner of Income Tax(A) was not justified in enhancing the NP rate of AY 2005-06 from 9.23% to 15% for the year under consideration. 7. The AR also pointed out that when the various authorities proceeded to estimate NP rate, then NP rate in assessee s own earlier and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her books of accounts and some bills and vouchers pertaining to the claim of expenses were not found to be correct. Therefore, the Assessing Officer disallowed 94.64% of the expenses claimed by the assessee and consequently made an addition of Rs.1,28,71,393 in this regard. The first appellate authority i.e. Commissioner of Income Tax(A) went on to estimate the net profit (NP) of the assessee on the basis of specific percentage of the receipts during the year. The Commissioner of Income Tax(A) noticed the NP rate of AY 2005- 06 which was 9.23% of the total receipts but the Commissioner of Income Tax(A) observed and held that some expenses like rent, fixed salary etc. do not increase or inflate in the same proportion in which the gross receipts increase. Hence, on this basis, the Commissioner of Income Tax(A) adopted a higher percentage i.e. 15% of the receipts. The assessee is aggrieved by the higher estimation and the revenue is aggrieved by the restriction of addition to the tune of Rs.13,61,654 i.e. 15% of gross receipts but when the assessee is not producing books of accounts before authorities below and bills and vouchers submitted by her were not found to be correct, then th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant for ICICI Bank in the nature of loan customers provided by the appellant to ICICI Bank Ltd. This nature of business needs a big team of field and office workers and intensive communication and persuasion to the customers for soliciting the business being a competitive line. The telephone connections more than 70 at a time and the operation of business from 4 offices itself proves the massive involvement of staff, which involves substantial expenses. The biggest head of expenditure is salary, wages, commission, incentives and other benefits to the staff which are partly as fixed amount and partly out of the commission income earned by the appellant through the efforts of these staff persons. Thus, the incurring of substantial expenses taking away a major portion of the gross commission receipts of the appellant cannot be ruled out. In this case, from the Asstt. Order it is evident that the AO has disallowed all such expense for which documentary evidence/ supportings upto the satisfaction of the AO have not been furnished. The case of the appellant is that although all the supportings and evidences duly existed and were also subjected to audit, however, for the reasons alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor, obviously, will increase the net profitability of the concern. Keeping in view this aspect and the fact that in A.Y. 2005 - 06 the declared N.P. rate is 9.23%, I hold that it will be most appropriate to determine the N.P. rate in the year under consideration at 15% against declared at 5.54%. This NP rate will take into its consideration all disallowances out of expenses for whatever reason made by the AG. The result of my finding will be that the N.P. will stand calculated at Rs.21,59,780/- against declared at Rs. 7,98,126/- by the assessee, thereby making and sustaining the addition to the extent of Rs. 13,61,654/-. At this stage, I need to mention that the appellant has filed comparative results of similar case namely M/s Moneyline Marketing (P) Ltd. for A.Y. 2005 -06 wherein N.P. rate has been declared at 1.28% on gross receipts of Rs. 2.83 Cr and for A.Y. 2006 - 07 declaring N.P. rate of 1.6% on gross receipts of Rs. 1.10 Cr. The appellant has also filed comparative details of another firm M/s. Treasure for A.Y. 2007 - 08 wherein on declared gross receipts of Rs. 46.20 lacs, N.P. has been declared at 2.82% which has been accepted u/s. 143 (3) with minor and routine addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self is declaring higher percentage of NP during earlier and subsequent years of assessment and the Commissioner of Income Tax(A) rightly rejected the same. On the basis of discussions made hereinabove, we are of the view that action of the Assessing Officer in disallowing 94.64% of the expenses claimed was not justified and on the other hand, the Commissioner of Income Tax(A) adopted a reasonable and balanced approach in proceeding to estimate the NP rate of the assessee on the basis of total receipts during the year and also the Commissioner of Income Tax(A) took 15% of total receipts as net profit of the assessee as per factual matrix and other relevant facts and circumstances of the case and we are unable to see any valid or justified reason to interfere with the impugned order in this regard. Accordingly, ground no. 2 of the revenue and ground no. 2 of the assessee are dismissed. Ground No. 1 of the Revenue 12. Ground no. 1 of the revenue reads as under:- The ld. Commissioner of Income Tax(A) erred in law and on facts in deleting the addition of Rs.70,170/- made by the Assessing Officer on account of difference in service charges as claimed by the assessee. 13. Aprop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. The appellant has categorically denied the accrual or receipt of this sum of Rs. 70,170/- at any point of time. The claim of the appellant that this sum remains un-identified and unsubstantiated in the bank statement as well as from any other material in possession of the AO. This contention remains un-rebutted in the Asstt. Order. Under these facts, I am constrained to agree with the contention of the AR that in the absence of discharge of onus by the AO of proving the accrual or receipt of said sum, it cannot be considered as undeclared income simply on the basis of mentioning of a figure on the TDS certificate by ICICI Bank. In case the AO wanted to verify this fact, he could have sought the details from the ICICI Bank and only after finding the same being not declared, it could had been added. Hence as per the discussion made above I delete the addition of Rs. 70,170/-. However, in the fitness of things, the appellant is not entitled for the credit of TDS relatable to this sum of Rs. 70,170/- if allowed to the appellant. In case it already stands allowed, the Assessing Officer is directed to withdraw the same. 17. In view of above, we observe that the assessee did not fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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