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2015 (12) TMI 1407 - ITAT CHANDIGARH

2015 (12) TMI 1407 - ITAT CHANDIGARH - TMI - Estimation of Gross Profit rate - Gross Profit rate of 11.5% confirmed by CIT(A) - Held that:- It is undisputed that the books of accounts were never produced before the Assessing Officer. Certain other alarming facts were also found by the Assessing Officer, the obvious conclusion made by him was to reject the books of account. The assessee preferred not to press the ground related to rejection of books of accounts before us. In such a scenario the e .....

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assessee for estimating profit when no books were produced before AO. We rely on decision of Punjab & Haryana High Court in case of CIT Vs. Rajinder Parshad Jain, [ 2014 (12) TMI 567 - PUNJAB & HARYANA HIGH COURT] - No infirmity in the order of CIT(A) on this issue. The Gross Profit rate 11.5% as estimated by the CIT(A) seems reasonable in the facts & circumstances of the case.

As we have upheld the estimation of Gross Profit @ 11.5% while adjudicating the earlier grounds, no other di .....

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A)-Patiala, dt.26.02.2015 2. The brief facts of the case are that the assessee is a manufacturer of harvester combines. During the assessment proceeding assessee failed to produce the books of accounts such as cash book, ledger, day book, purchase and sale bills and expenditure bills as asked for by the Assessing Officer vide various letters. No quantitative details of opening stock or closing stock was submitted, neither the production register nor stock register for raw material and finished/s .....

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e relatives/family members specified under section 40A(2)(b) of the I.T.Act. No details regarding the services rendered by the brokers could be submitted. The Assessing Officer on this basis and relying on various case laws rejected the books of accounts under section 145(3) of the Income Tax Act, 1961 and estimated Gross Profit @12.5% of the turnover. 3. Further, the assessee had made payment of ₹ 51,945/- under the head advertisement and publicity expenses which exceeded ₹ 20,000/- .....

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ere furnished before AO and it is not feasible to maintain stock register therefore books should not be rejected. However, there is no need to elaborate the same as the AR preferred not to press the ground related to rejection of books. Further assessee cited various comparable cases to justify the fall in N.P. rates. 5. The detailed submission so made by the assessee were sent to the Assessing Officer for counter comments by the CIT(A), who in reply vide letter No.11 dated 25.01.2014 again reli .....

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refore, is was contended that the provisions of section 40(a)(ia) cannot be invoked in such circumstances. 7. The CIT(A) considered the detailed submissions made by the assessee and looking into the entirety of the facts and circumstances of the case opined that books of A/c are rightly rejected u/s 145(3) of the Income Tax Act and in this case since the appellant itself has shown Gross Profit rate of 11.28% in the assessment year 2008-09, the Gross Profit rate of 11.5% may be taken for this yea .....

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Now, both the assessee as well as the department have come in appeal before us. The department has raised following grounds: 1. In the facts and in the circumstances of the case, Ld. CIT(A) has erred in rejecting the GP rate of 12.5% applied by the AO to 11.5% even while upholding the rejection of the book results u/s 145(3). 2. In facts and circumstances of the case and in law, the ld. CIT(A) has erred in relying upon the trading results of earlier year to estimate the net profit, ignoring the .....

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that the order of Ld. CIT(A) be set aside and that of the AO restored. 5. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard and finally disposed. Wherein the assessee has raised the following grounds. 1. The assessee is partnership firm running the business of manufacturing of Harvester Combines and its parts. The books of accounts of the assessee has been wrongly rejected by invoking the provisions of section 145(3) of the I.t. Act, 1961 and the assessm .....

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were ₹ 360.46 Lacs only. The appeal of the assessee was partly allowed. The assessee also submitted before the Ld. CIT (A), Patiala that the G.P @ 11.09% was declared by the assessee for the A.Y.2009-10 on the sales of ₹ 1195.78 Lacs. The case of the assesee was seleted for scruitiny. The assessment was completed u/s 143(3) on 05.12.2011 and the G.P rate of 11.09% was accepted (Copy of the assessment order for the A.Y.2009-10 was also provided). The submission of the assessee has bee .....

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subject to deduction of TDS u/s 194C hence no TDS was deducted. These expenses were wrongly added back in the income for the A.Y.2010-11 u/s 40 (a0 (ia0 of the I.T. Act, 1961. the submission of the assessee has been wrongly ignored by the CIT(A), Patiala. The additons of ₹ 51945/- deserves to the deleted. 10. The learned Counsel for the assessee while appearing before us preferred not to press ground No.1 related to the rejection of books of accounts. The Ground No. 1 is therefore, dismiss .....

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ition of Rs,30,000/- only was made in the trading results declared by the assessee. After taking into account this addition of ₹ 30,000/-, Gross Profit rate of 11.11% was accepted by the Assessing Officer. The Copy of the assessment order for the Assessment Year 2009-10 was also filed before the CIT(A). It was further submitted that the A.O. has wrongly based his estimation on the basis of Gross Profit rate declared in the Assessment Year 2008-09. Since, there was an increase of ₹ 10 .....

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immediate preceding assessment. There is no reason for making such estimation during the relevant assessment years. 12. Regarding the estimation of Gross Profit rate learned Counsel for the assessee submitted that Gross Profit rate for Assessment Year 2008-09 being 11.28% and that of Assessment Year 2009-10 being 11.09% the rate of 10.59% in Assessment year 2010-11 is not a big fall. Further it was submitted that the fall in Gross Profit has been explained to the Assessing Officer as well as CI .....

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icer. Certain other alarming facts were also found by the Assessing Officer, the obvious conclusion made by him was to reject the books of account. The assessee preferred not to press the ground related to rejection of books of accounts before us. In such a scenario the estimation of Gross Profit rate is a must. The assessee cannot plead to accept the Gross Profit rate as declared by him, when books of A/c and details were not produced before authorities below. The CIT(A), in this case has given .....

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the persons might have accepted receipt of the amount but the nature and extent of the service provided by such persons is not clearly established as mentioned by the Assessing Officer. In absence of complete books of accounts coupled with the fact that heavy expenses pertain to payment made to specified persons I am of the opinion that books of accounts have been correctly rejected by the Assessing Officer. As regards estimation of profit the appellant himself has shown 11.28% gross profit in t .....

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opies of bills contending that M/s Preet Agro Industries are purchasing engines at lower cost directly from the manufacturer. However, submitting only a few copies of such bills do not justify the fall in margin as the appellant itself in earlier years has shown higher margin and the appellant failed to show that the facts were different in that year. Therefore, the additional evidence submitted has no relevance and is not acceptable. Looking into entirety of the facts and circumstances of the c .....

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rofit when no books were produced before AO. We rely on decision of Punjab & Haryana High Court in case of CIT Vs. Rajinder Parshad Jain, 374 ITR 545. 15. In view of the above, we do not find any infirmity in the order of CIT(A) on this issue. The Gross Profit rate 11.5% as estimated by the CIT(A) seems reasonable in the facts & circumstances of the case. 16. In the result, ground No.2 of the assessee s appeal & ground No.1-5 of the department s appeal are dismissed. 17. Regarding th .....

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