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DCIT, Ahmedabad Versus Shri Mahendrakumar D. Desai

2015 (12) TMI 701 - ITAT AHMEDABAD

Estimation of Gross Profit - CIT(A) deleted the addition - Held that:- As decided in assessee's own case for previous AYs 2005-06 to 2007-08 the rejection of books of account u/s.145(2) was not justified on the basis of defects pointed out by the A.O. Further, GP addition also is not required due to substantial trading in lignite during the year. The reasons given by the appellant is based on evidences. Thus, we allow the appeal of the assessee on both grounds. - Decided against revenue

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has not brought on record to show that the mistake was rectified u/s 154 within the time allowed under that section. Even if this has been rectified then also we feel that such ad-hoc disallowance without pointing out as to what was the details called for which were not submitted, is not justified. - Decided against revenue - ITA Nos. 2515 & 2516/Ahd/2012 - Dated:- 8-12-2015 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For the Respondent : Ms. Sanyogit .....

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idated order for the sake of convenience. ITA No. 2515/Ahd/2012 : AY 2008-09 2. In this appeal, the Revenue has raised following grounds of appeal:- 1) The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law on facts in deleting the addition of ₹ 10,45,770/- made on account of estimation of Gross Profit. 2) The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law on facts in deleting the disallowance of ₹ 6,95,799/- made on account of transporta .....

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al, fire wood etc., shares and income from other sources. During the year under consideration, the assessee has shown total turnover of ₹ 18,92,05,641/- disclosing gross profit of ₹ 41,44,254/- which in terms of percentage works out to 2.19% as against 1.97% shown in the preceding year from the turnover of ₹ 9,52,62,305/-. The Assessing Officer has asked the assessee to furnish certain details by way of show cause notice dated 09.12.2010 in respect of low GP and in response to .....

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received, reasonability of addition on account of low gross profit on rejection of books is to be estimated so as to meet the end of justice and to cover up assessee's plea made before the higher authority for reasonability of addition. 6.1. As mentioned in the chart, the purchase/sale of Charcoal, DOC, Fire-wood, GNS Powder, White-coal etc, are comparatively of small sales item and gross profit is also small or G.P. is higher or lower makes no difference in over all quantum of gross profit. .....

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₹ 9,33,89,929/- and ₹ 4,25,01,700/- respectively. Sales were increased to almost double. 6.2. As stated above and regarding readability of gross profit, it may be stated that the assessee had never furnished the elaborate details/datas of his trading business in the past. Therefore, it is possible for the first time to make analytical study in order to reach to the possible reasonable estimate of the profit, in absence of such data in the past, even appellate authority had also redu .....

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e always fixed and open in the market and variation depends on market condition. The profit declared in lignite is not disturbed. 6.3. With the above back ground of facts, assessee's argument to justify his gross profit and analysis of purchase/sales data furnished by the assessee as well as the proof found during the course of survey that assesses had generated unaccounted income from the business, there is no hesitation for rejection of books as assessee's books suffer from the defects .....

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ross profit on sale of steam cock. As such, the addition on account of low gross profit is worked out as under: 12% GP on sales of steam cock ₹ 93389929 Rs.1,12,06,790 Less: G.P. shown on these sales Rs.1,01,61,020 Difference 10,45,770 The same is added to the total income. 2.2 The second issue was regarding the disallowance of ₹ 6,95,799/- on account of transportation charges (Noor and Jakat). In this regard, the Assessing Officer made an addition of ₹ 6,95,799/-, by observing .....

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on the basis of self prepared vouchers and it does not contain the complete details as well as addresses of the payee. Also the payments were made only in cash and kept always below ₹ 20,000/-. On single day huge cash payments were made, in earlier years also the assessee had applied same modus operandi and thereby it was noticed at the time of verification and survey operation earner] out in this case that expenses are not subject to check and cross verification. Therefore on a reasonabl .....

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ed the same, the CIT(A) deleted the addition of ₹ 10,45,770/- made on account of estimation of Gross Profit and the disallowance of ₹ 6,95,799/- made on account of transportation charges i.e. Noor & Jakat. The same has been opposed on behalf of the Revenue inter alia submitted that the CIT(A) erred in deleting the addition of the addition of ₹ 10,45,770/- made on account of estimation of Gross Profit and also against the deletion of disallowance of ₹ 6,95,799/- made o .....

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A No.2835/Ahd/2008, by observing as under:- 6. We have heard the rival contentions and perused the material on record. During the assessment year under consideration, the assessee has started lignite trade on which brokerage had been received. If the lignite turnover reduced from the total turnover, the GP would be near about 15%. The ld. A.O. had pointed out various defects in the books of account, such as, quantity stock had not been maintained, outstanding liability of the transporter increas .....

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nder: 2.2.5 In view of the above discussion, we are of the considered opinion that in the facts of the present case, even the rejection of books of account is not proper and even if rejection of the books of accounts is accepted, the addition made by the A.O. on account of G.P. addition and disallowance made by the A.O. on account of bogus freight liability cannot be sustained. We, therefore, allow all these three grounds of the assessee. After considering all the facts and evidences produced du .....

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ng as mentioned in the aforesaid case for AYs 2005-06 to 2007-08 as discussed above, we are not inclined to interfere with the findings of the CIT(A) who has rightly deleted the addition of ₹ 10,47,770/- made on account of estimation of Gross Profit; accordingly, the same is upheld. 3. With regard to the second issue regarding the deletion of disallowance of ₹ 6,95,799/- made on account of transportation charges (Noor & Jakat), it was brought to our knowledge that this issue was .....

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specified as to what were those details which were called for. This is not the case of the A.O. that payment of noor jakat expenses is excessive or unreasonable as compared to earlier years. It is also not mentioned that what type of details were called for and moreover, no actual addition was made by the A.O. in the computation of income in page 13 of the assessment order and it has not brought on record to show that the mistake was rectified u/s 154 within the time allowed under that section. .....

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