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Income-tax Officer, Wd-52 (1) , Kolkata Versus Shri Tapan Kundu

2016 (6) TMI 930 - ITAT KOLKATA

Estimation of net profit @ 0.75% - rejection of trading & profit and loss account - business of export of rice and mustard cake - Held that:- The assessee had not produced any books of accounts and supporting documents before the Learned AO. Under these circumstances, we find that net profit of the business had to be determined only on estimated basis. We find that the Learned CITA in the absence of past history of the assessee, had resorted to refer to subsequent year’s net profit which was dis .....

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allowed. - I.T.A No.1393/Kol/2013 - Dated:- 1-6-2016 - Shri N. V. Vasudevan, JM & Shri M. Balaganesh, AM For The Appellant: Smt. Ranu Biswas, JCIT, Sr. DR For The Respondent: Shri K. M. Roy, FCA ORDER Per Shri Balaganesh, AM: This appeal by revenue is arising out of order of CIT(A)-XXXIII, Kolkata vide Appeal No. 261/CIT(A)-XXXIII/ItO.Ward-52(3)/Kol/09-10 dated 22.03.2013. Assessment was framed by ITO, Ward-52(3), Kolkata u/s. 144 of the Income tax Act, 1961 (hereinafter referred to as the A .....

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for scrutiny. In course of assessment proceedings the assessee did not produce original bank statements, cash book, bank book, general ledger, party ledger, purchase ledger, sales ledger, stock register and other accounts and bills and vouchers of the business of M/s. Tapan Traders for examination and verification and hence the Ld AO was not satisfied about the correctness of the Trading and Profit and loss accounts for the year ended on 31.03.2007 of the said business. The assessee replied vid .....

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e impounded books. Accordingly, he proceeded to reject the trading and profit and loss account filed by the assessee u/s 145(3) of the Act. The Learned AO observed in the assessment order that purchase bills / invoices for July 2006 were furnished by the assessee. He observed that the rate of purchase was ₹ 7.257 per kg and as per sales summary, the rate of sale was ₹ 8.023 per kg. Considering the same, he concluded that the actual purchase for export sales of ₹ 13,56,91,267/- .....

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hat the assessee was dealing in mustard oil cake as well as rice and occasionally in dal. The Learned AO had considered only the bills / invoices pertaining to mustard oil cake and that for only one month i.e July 2006 and there too, he had just picked up the bills with lowest rate of purchase. The assessee argued that the Learned AO had taken 10 bills for purchase with quantity of 133740 kgs , whereas sale bills are 17 in number with quantity of 2370000 kgs and stated that in the assessee s lin .....

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ition made by the assessing officer in this case is for undisclosed profit. However, it is to be noted that the undisclosed profit worked out by him is not based on any evidence regarding actual suppression. Though a survey action under section 133A had been carried out at the appellant's premises, there is no specific finding that either any purchase had been inflated or sale price was understated. What the assessing officer has done in that he has computed average sale price as per invoice .....

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ally a third commodity, being dal) and their sale and purchase prices keep on fluctuating. This contention has been supported by producing sample bills, where rates of purchase are much higher than taken by the assessing officer. Even otherwise, it is common knowledge that purchase, as well as export prices of commodities like rice, mustard oil cake etc. keep on fluctuating, not necessarily in synchronization and their ratio cannot be expected to be constant. Therefore, it won't be proper to .....

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e the addition made by the assessing officer is not sound and cannot be sustained, the book results of the appellant can also not be fully accepted. A proper way to proceed in such a case, in my opinion, would be applying some suitable rate of net profit. It is seen, that in the immediately succeeding year, i.e. A.Y.2008- 09, the appellant has shown net profit rate of 0.60%. However, no scrutiny assessment was made in that year. Books of accounts have not been produced during the year under appe .....

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details of sundry creditors had been produced, from the copies of submissions made by the appellant during the assessment proceedings, certified by the assessing officer, it is clear that he had given list of creditors. Copies of bills for the major parties on which their addresses were printed had also been given. Thus, the assessing officer could have made verification if considered necessary by him. Therefore, his action of adding all sundry creditors without any verification cannot be upheld .....

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ar. In former case, no addition can be made in the year under consideration, whereas in the latter case the concerned expenditure has been taken into account while estimating net profit and separate addition is not warranted from that perspective as well. Considering this the addition of ₹ 8,40,000/- is deleted.. 7. Aggrieved, the revenue is in appeal before us on the following grounds:- 1. That on the facts and in circumstances of the case the CIT(A) erred in reducing the addition and fro .....

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the CIT(A) failed to appreciate that the assessee had not maintained any quantitative details of Purchases & sales as per his own Auditor's Report in Form 3CD dated 25/10/2007 and even failed to produce the purchase bills for verification. 4) That on the facts and in circumstances of the case, the CIT(A) to failed to remand the matter to the A.O. for proper verification of the purchases and their matching sales to have a justified basis for estimation and hurriedly reduced it from 6.09% .....

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sponse to this, the Learned AR vehemently supported the order of the Learned CITA and stated that this is the first year of assessee engaged in this line of business and hence there was no past history available with the assessee to understand the profit percentage earned in the earlier years. Hence the Learned CITA is justified in referring to immediately succeeding assessment year wherein assessee had disclosed net profit rate of 0.60%. However, in the absence of production of books of account .....

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