TMI Blog2016 (10) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... rest and depreciation expenses from the profit. The same fact was communicated in the statement to the AO. There was no iota of defect in the books of the assessee. The case law cited by the DR is not relevant to the facts of the present case as besides the statement the AO has to bring sufficient evidence before making the addition. There is no material to justify the addition made by the IT authorities to the gross profit shown by the assessee in his account books. The additions were made on ad hoc basis and not on the evidence such as the trading conditions in similar trade or on the reconstruction of the account books of the assessee on the basis selected by the ITO which was different from the one adopted by the assessee. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and on facts by allowing the relief of ₹ 49,29,534/- disallowed by the Assessing Officer on account of showing low Net Profit percentage over turnover; 2. That the Ld. CIT(A), Asansolhas erred in law and on facts by allowing the relief of ₹ 76,49,136/-, disallowed by the Assessing Officer u/s. 40A(2) on account of excess payments made to relatives and associate concerns. Sri S.M. Surana, Ld. Authorized Representative appeared on behalf of assessee and Shri Dinabandhu Naskar, Ld. Departmental Representative appeared on behalf of Revenue. 2. The first issue raised by the Revenue is that ld. CIT(A) erred in deleting addition of ₹ 49,29,543/- to the total income of the assessee. 3. Facts in brief are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved, assessee preferred an appeal to ld. CIT(A) who has deleted the addition made by the AO by observing that the AO has nowhere shown any dissatisfaction about the books and also not rejected any books of accounts. Without any defect in the books of accounts turnover or income cannot be estimated. The percentage of profit is estimated @ 3.5% is just a figure of average of 3% to 4% as stated by the partner of the assessee. No logical basis of adoption of this percentage is mentioned anywhere. No definite conclusion can be arrived from AO order. There is no specific material found during the survey of the assessee with regard to the undisclosed income. Being aggrieved by this order of Ld. CIT(A) Revenue came in appeal before us 5. Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts. The ld. AR vehemently supported the order of the ld. CIT(A). 6. We have heard the rival contentions of both the parties and perused the materials available on record. From the foregoing discussion we find that the AO has made the addition on the ground that the assessee has declared less profit in comparison to the AY 2010-11. However the ld. CIT granted the relief to the assessee as the AO failed to bring any defect in the books. In the instant case the AO has made addition on his surmise. It is well settled proposition of the law that for making any addition to the total income of assessee there has to be cogent evidence. In the absence of the same the addition shall not stand. The submission of ld. AR is that the profit r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It assumed they did. The estimate so made, in the erroneous belief that a formula for an estimate once evolved constitutes an infallible basis for all subsequent estimates, cannot be sustained for the reason that what it overlooked was that, normally, a change in market conditions disturbs the old ratio between the turnover and the profits. There was no material for the Tribunal to set aside the order of the AAC. There is no material to justify the addition made by the IT authorities to the gross profit shown by the assessee in his account books. The additions were made on ad hoc basis and not on the evidence such as the trading conditions in similar trade or on the reconstruction of the account books of the assessee on the basis sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the parties to whom the payment is made is the same as the address of the assessee. The parties to whom the payment has been made are doing the business only for the assessee. For different kinds of job name of same people are appearing again and again. It shows that assessee was debiting its account by giving accommodating entries to its family members. Even the assessee has made the payment after deduction of TDS and through banking channel but these have been claimed at inflated amount. Accordingly the AO disallowed all the expenses paid to the family members to the tune of ₹ 76,49,136/- (3,05,96,544 * 25%) and added to the total income of the assessee. 9. Aggrieved, assessee preferred an appeal to ld. CIT(A) and submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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