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2015 (10) TMI 2117 - ITAT MUMBAI

2015 (10) TMI 2117 - ITAT MUMBAI - TMI - Estimation of income - method adopted by Assessing Officer of evaluating G.P. on the basis of G.P. ratio of the previous two years - AO rejecting the return of income filed by the assessee and disregarding the book result shown therein and estimating the income under the head 'business' at ₹ 57,95,266/- as against the loss of ₹ 18,74,33,043/- as shown by the assessee in the return of income filed - CIT(A) deleted the addition -

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s and having suffered similar losses in the same year. In support of its claim of destruction of records due to water loging in the business premises caused by heavy rains on 8th July, 2009, the assessee filed affidavits and police complaint and copy of newspaper report. The Assessing Officer did not make verification of any of these documents, but disbelieved the same without bringing anything contrary on record. With regard to justification of the loss, the assessee had submitted evidences sho .....

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l the purchases were made in the earlier years at higher rate prevailing at that time. Due to the aforesaid steep fall of more than 70% in the rate of goods traded by the assessee, gross loss was incurred by the assessee.

The documentary evidences submitted, the details of which have been reproduced in this order above, would show that on the basis of these documentary evidences, the Assessing Officer could have very well satisfied himself to clear any doubts. During course of hearing .....

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g Officer in the assessment proceedings or by Learned Departmental Representative at this stage. Thus ld. CIT(A) correctly deleted the addition made by the Assessing Officer. - Decided in favour of assessee. - ITA No. 5986/Mum/2013 - Dated:- 28-9-2015 - Shailendra Kumar Yadav, JM And Ashwani Taneja, AM For the Petitioner : Shri Jeetendra Kumar, DR For the Respondent : Shri Rajkumar Singh, AR ORDER Per Ashwani Taneja, AM. This appeal has been filed by the Revenue against the order of learned Comm .....

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s of the case and in law, the Ld.CIT(A) has erred in not giving credence to the method adopted by Assessing Officer of evaluating G.P. on the basis of G.P. ratio of the previous two years which was most logical method in absence of Books of Account mandatory for assessee to be maintained and preserved? 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 3. The solitary issue raised in both the grounds is that whether the Assessing Officer .....

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ssessing Officer consulted the past history of the assessee and estimated the GP at ₹ 1,40,57,727/-, after deducting the expenditure shown by the assessee in its books of accounts at ₹ 82,62,461/-, the net profit of assessee was estimated at ₹ 57,95,266/-. The books of accounts were not produced by the assessee, therefore, the Assessing Officer had no option but to estimate the profit. It was argued by the ld. D.R. that CIT(A) has erred in reversing the order of the Assessing O .....

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records pertaining to the current year. But the data was saved in the computers and the assessee took another print out of these books of accounts from the computer. These were produced to the Assessing Officer for his verification. The assessee also arranged confirmations and other subsidiary records before the Assessing Officer. It was requested to the Assessing Officer during the assessment proceeding that direct verification could be made by the Assessing Officer with the suppliers and cust .....

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laim. However, the Assessing Officer disregarded all the submissions and evidences brought on record by the assessee and resorted to estimation of income. It was finally submitted that the CIT(A) has taken into consideration all the facts and circumstances of the case and taking a judicious view in the matter, the ld. CIT(A) has deleted the addition made by the Assessing Officer. It was requested that the order of ld. CIT(A), being in accordance with law and facts, deserves to be upheld. Ld. Cou .....

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ing business loss of ₹ 18,74,33,043/-. During course of assessment proceedings, the Assessing Officer observed that in absence of physical books of accounts, evidences for sales, purchases and expenses claimed, verification of the figures reported by the assessee in P&L account could not be done. Therefore, the Assessing Officer estimated net profit of the assessee based upon GP rate of previous two years. It has been noted by us that books of accounts of the assessee are audited by th .....

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on the computer systems. It is noted from the records shown to us that assessee had submitted following details and documentary evidences before the Assessing Officer: Sr. No. Particulars of Documents enclosed Page No. 1. Copy of letter dated 26th December 2011 filed before ld. A.O. with the following documents:- i) Affidavit of assessee dated 16/07/2009 for destruction of physical accounting records due to heavy rains on 08/07/2009. ii) Copy of Police Complaint dated 16/07/2009. 1 to 2 3 to 4 .....

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& value. iv) Extract of Itemwise goods of Stock Register of entire year. v) Details of Payments made to old Sundry Creditors. vi) Price graph of Nickel quoted on London Metal - Exchange for the entire year from 01/04/2008 to 31/03/2009. 6 to 8 9 to 12 13 to 16 17 to 18 19 to 33. 34 35 3. Copy of letter dated 16/11/2011flled before ld. A.O. alongwith confirmation letter of sales parties & following other documents. i) Partywise Sales with address & value. ii) Partywise Purchase with .....

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alance Sheet & Profit & Loss A/c with all Schedules. 63 64 to 65 66 67 to 84 85 to 94 It has been further brought to our notice that the assessee also produced books of accounts including stock records maintained and generated on the computer system, which was verified by the Assessing Officer as well. Details of party-wise sales and purchases made during the assessment year were also filed. Some confirmations of sales and purchases were also filed containing requisite particulars of the .....

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sessee filed affidavits and police complaint and copy of newspaper report. The Assessing Officer did not make verification of any of these documents, but disbelieved the same without bringing anything contrary on record. With regard to justification of the loss, the assessee had submitted evidences showing that the rate of Nickel (the main ingredient of non ferrous metal traded by the assessee), crashed consistently throughout the year and came down from ₹ 30,000/-per M.T. in April 2008 to .....

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ncurred by the assessee. 6. We have considered all these facts and circumstances very carefully. It is noted that due to the reasons beyond the control of the assessee, the main documents in the form of purchase bills and sale bills could not be submitted by the assessee to the Assessing Officer. The assessee made efforts and submitted ample evidences, as an alternative measure to substantiate the return and the final accounts submitted by the assessee. The documentary evidences and details subm .....

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