TMI Blog2014 (1) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod for the purpose of computing turnover of the assessee - Method applied was not proper in the facts and circumstances of the case and in absence of any adverse material on record against the assessee, the proper and reasonable course should have been to estimate the turnover of the assessee considering the history of the assessee which was found reasonable basis for applying NP rate of 7% - in none of the earlier years turnover of the assessee have exceeded Rs.8.25 lacs - considering the past history of the assessee, the turnover of the assessee is estimated at Rs.15 lacs upon which 7% profit rate the profit would be estimated at Rs.1,05,000/- - The assessee has already declared income of Rs.72,000/- on estimate basis and after giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date prescribed u/s. 139(1) of the IT Act. It was found that the return of income has been filed on estimate basis. Special Audit of various concerns of special group was directed, but the assessee did not co-operate regarding special audit because no books of account were produced. Ultimately, no special audit report has been furnished. The assessee filed reply at the Dak counter. The AO discussed issue in detail on the basis of stock found during the course of survey in different premises and worked out total stock in the hands of the assessee in a sum of Rs.16,57,126/- because this stock could not be segregated during the course of survey in different premises. The opening stock was found of Rs.82,750/- as per assessee. Therefore, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2006-07 for estimation of the turnover for the assessment year under consideration and the same was computed at 10.27%. The assessee submitted before the ld. CIT(A) that stock turnover ratio for the assessment year 2004-05 is 14.08% and if this stock turnover is applied, the estimated turnover will be further reduced. It was pointed out that the total deposit in the bank account of the assessee during the assessment year under appeal was only Rs.3,35,000/- and the AO himself in the case of sister concern, M/s. Sharma Handloom Industries for the assessment year 2007-08 under the similar circumstances in the absence of books of account, has adopted total deposits as turnover of the assessee. Therefore, the AO should not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced the addition to Rs.73,846/- instead of Rs.6,08,902/- made by the AO. The appeal of the assessee was accordingly, partly allowed. 3. The assessee is in appeal and it is stated that no departmental appeal is preferred. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that when the previous history of the assessee is considered for applying the NP rate of 7%, previous history should also be considered for the purpose of calculating the turnover of the assessee. The estimation of turnover on the basis of stock turnover ratio method is hypothetical and without any basis. He has submitted that the estimate of turnover is excessive, exorbitant and unreasonable. On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the stand taken in the case of sister concern. The assessee also pleaded that the previous history of the assessee should have been considered. The ld. CIT(A) considering the previous history of the assessee, particularly in preceding assessment year 2006-07 where NP rate of 6.37% has been accepted, directed to apply the NP rate of 7%. History of the assessee in earlier years is reproduced at page 27 of the appellate order and the same reads as under : A.Y. Sale Gross Profit % G.P. Net Profit % N.P. 2006-07 825756 181141 22.00 52621 6.37 2005-06 820693 180919 22.04 47919 5.84 2004-05 754419 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any adverse material on record against the assessee, the proper and reasonable course should have been to estimate the turnover of the assessee considering the history of the assessee which was found reasonable basis for applying NP rate of 7%. History of the assessee as noted above clearly suggests that in none of the earlier years turnover of the assessee have exceeded Rs.8.25 lacs. Therefore, even if turnover of the assessee is taken and estimated on a very high side at Rs.15,00,000/-, in the absence of production of books of account and other material, the same would be very reasonable and proper against estimated turnover at Rs.20,83,515/- adopted by the ld. CIT(A). In view of the above discussion and considering the past hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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