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TMI Blog2016 (8) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated addition on account of gross profit requires to be deleted. 2. The learned CIT(A) has further erred in estimating the addition of G.P. at 20% of alleged unverified purchases of Rs. 7,74,687/- as against estimation of G.P. @ 20% of total turnover as made by the AO. In view of facts of the case and more particularly the nature of business of the appellant, the entire addition ought to have been deleted. The appellant craves leave to add, amend, alter, modify or delete any of the above grounds as well as to submit additional grounds at the time of hearing of the appeal. Grounds in ITA No.1712/Ahd/2012 (Revenue's appeal) :- (I) The CIT(A) has erred in taw and on facts in accepting the explanation of the Assessee that the opening capital appearing in the balance sheet was brought forward from the closing balance appearing in the balance sheet for the immediately preceding F.Y, particularly when the Assessee had not maintained regular books of accounts for the preceding year and had merely submitted copies of unaudited P&L A/c and balance sheet. (II) The CIT(A) has erred in law and on facts in holding that the bookresult of the Assessee were acceptable and the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of estimation of gross profit to the extent of Rs. 1,54,937/- out of total addition of Rs. 7,09,229/- made by the AO without proper consideration and appreciation of the facts of the case. In view of facts and submissions filed as well as legal position, the entire estimated addition on account of gross profit requires to be deleted. 2. The learned CIT(A) has further erred in estimating the addition of G.P. at 20% of alleged unverified purchases of Rs. 7,74,687/- as against estimation of G.P. @ 20% of total turnover as made by the AO. In view of facts of the case and more particularly the nature of business of the appellant, the entire addition ought to have been deleted. The appellant craves leave to add, amend, alter, modify or delete any of the above grounds as well as to submit additional grounds at the time of hearing of the appeal. Revenue's ground - (II) The CIT(A) has erred in law and on facts in holding that the bookresult of the Assessee were acceptable and the addition made on account of suppressed gross profit was not tenable. 5. As two grounds raised by assessee are inter-connected and ground no.(II) of Revenue's appeal relate to the same issue, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 & 2 but the sole grievance is addition of Rs. 1,54,937/- sustained by ld. CIT(A) by disallowing 20% unverifiable purchase of Rs. 7,74,687/- whereas Revenue is in appeal against the order of ld. CIT(A) holding that the book results of the assessee were acceptable and addition on account of gross profit addition made by the Assessing Officer is not tenable. 9. We observe that return of income was filed by assessee on 19/10/2011 in compliance to notice u/s 148 of the Act dated 21.10.2010 because even when TDS was deducted on contract payment of Rs. 1,66,54,360/-, assessee did not file return of income in the regular course u/s 139 of the Act. Along with return of income audit report u/s 44AB of the Act was also attached and TDS certificate from Gujarat State Petroleum Corporation, Cadila Health Care Ltd. and Erhardt + Leimer (India) Pvt. Ltd., copy of agreement with Cadila Health Care Ltd. and copy of bank statement, were filed before ld. Assessing Officer. We further observe that no major defect was pointed out by ld. Assessing Officer except for the unverifiable purchases of Rs. 7,74,687/- for purchase of material like -milk, curd, vegetables, cooking gas etc. Apart from this o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities is fairly on an estimate basis, we find no reason for such disallowance and, therefore, we delete the same. Accordingly, ground no.1 & 2 of assessee's appeal are allowed and ground no.2 of Revenue's appeal is dismissed. 10. Now we take up remaining grounds of Revenue's appeal in ITA No.1712/Ahd/2012. 11. Ground No.(I) of Revenue - The CIT(A) has erred in taw and on facts in accepting the explanation of the Assessee that the opening capital appearing in the balance sheet was brought forward from the closing balance appearing in the balance sheet for the immediately preceding F.Y, particularly when the Assessee had not maintained regular books of accounts for the preceding year and had merely submitted copies of unaudited P&L A/c and balance sheet. 12. Ld. DR supported the order of ld. Assessing Officer. 13. On the other hand, ld. AR submitted that during the course of assessment proceedings, audited financial statements were submitted before ld. Assessing Officer and while examining the same, ld. Assessing Officer observed that brought forward opening balance of capital account of proprietary concern was shown at Rs. 60,85,758. Ld. Assessing Officer also observed that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng A.Y. (b) The investments made are not recorded in the books, if any, maintained by the assessee for any source of income. (c) Assessee place no explanation about the nature of source of investments or explanation offered by him is not, in the opinion of the A.O. satisfactory. The fulfillment or satisfaction of these conditions in the case of appellant is discussed in the following paras. (i) it is seen that A.O. had made addition against opening capital of the appellant. This makes it very clear that the A.O. has not detected any investment made by the appellant during the year under consideration. Accordingly, the first eligibility criterion of section 69 as mentioned above is not fulfilled. (ii) It is also a matter of fact that the appellant is maintaining the books of accounts and opening capital amount of Rs. 60,85,758/- has been recorded by the appellant in his books of accounts. In fact the figure of opening capital account of Rs. 60,85,785/- has been taken by the A.O. from the books of accounts and balance sheet of the appellant. It is clearly mentioned by the A.O. in para 5 of the assessment order that books of accounts and bills and vouchers were furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening capital balance of the appellant. I am not in agreement with this working also. It is seen that audited balance sheet for the A.Y. 2005-06 was available before the A.O. during the assessment proceedings. In this balance sheet, appellant has declared balance in capital account of Rs. 17,62,694/- and the fixed assets of Rs. 9,01,173/-. There is nothing on record to disbelieve this balance sheet. In view of these facts, I am of the considered, view that A.Q. should have given benefit of capital account of Rs. 17I62,694/-and w.d.v. of fixed assets of Rs. 9,01,173/-. 3.6 The A.O. had also made reference to debtors of Rs. 44,05,856/-. This figure is also disclosed in the balance sheet of the current year. This is the opening balance under the head sundry debtors for the current A.Y. This corresponds to closing balance of sundry debtors of Rs. 44,05,856/- as on 31-03-2007. This figure is also declared in in the balance sheet for A.Y. 2007-08. Since sundry debtors also corresponds to earlier year, accordingly, in my considered view, no adverse inference can be drawn in the current A.Y. 3.7 1 further place reliance on the case of Mohanlal Pukhraj v/s. DCIT (2005) 1(11) 1 TCL 160 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the case of assessee because ld. Assessing Officer has referred to the opening capital balance which takes its source from previous financial year and ld. Assessing Officer has taken the basis of opening capital of Rs. 60,85,758/- from the audited financial statement of assessee shown at Schedule-A of the audited balance sheet and has partly considered the opening capital explained to the extent of opening w. d. v. of motor car of Rs. 3,63,313/- and opening bank balance of Rs. 7,55,750/-. There is no mention of any other investment which is not recorded in the books of account. 17. We further observe that assessment u/s 143(3) r.w.s. 148 of the Act in the case of assessee for Asst. Year 2006-07 & 2007-08 were completed on 28.2.2013 which was after the assessment under section 143(3) r. w. s. 148 of the Act for Asst. Year 2008-09 completed on 27.12.2011. From going through the assessment order for asst. year 2007-08 we find that ld. Assessing Officer has accepted the audited financial statement as well as the opening and closing balance of capital account and the only addition made for asst. year 2007-08 relates to unverifiable purchases. Had there been any unexplained investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) [(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee : Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).] (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :] [Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, re-assessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has bee ..... 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