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DCIT, Ci rcle-3, Asansol Versus M/s Sanjay Transport Agency

2016 (10) TMI 712 - ITAT KOLKATA

Disallowance on low Net Profit percentage over turnover - AO has made the addition on the ground that the assessee has declared less profit in comparison to the AY 2010-11 - CIT granted the relief to the assessee as the AO failed to bring any defect in the booksHeld that:- 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 th .....

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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 of above we do not find any reason to interfere in the order of the ld. CIT(A). Accordingly, we uphold .....

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any reason to interfere in the order of the ld. CIT(A). Accordingly, uphold the same. This ground of Revenue’s appeal is dismissed. - ITA No.830/Kol /2013 - Dated:- 26-8-2016 - Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Appellant : Shri Dinabandhu Naskar, JCIT-SR-DR For The Respondent : Shri S.M. Surana, Advocate ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the Revenue is arising out of order of Commissioner of Income Tax (Appeals)-Durgapu .....

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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 .....

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on the income declared by the assessee for the year under consideration. As per AO it should be at least 2.8% of the turnover. Besides the AO also observed that assessee has claimed much higher expenses in the AY 2010-11 still showing higher percentage of profit. Accordingly, the assessee must be having higher percentage of profit in the year under consideration. The percentage of expense to turnover is 3.93% for AY 2009-10 whereas for the AY 2010-11 for the same expenses it is 4.63% of turnover .....

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54,78,307.00 -8,48,773.00) which was added to the total income of the assessee. 4. Aggrieved, 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 .....

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ccordingly the profit declared at the rate of .54% is under stated. The ld. DR also relied in the judgment of Hon ble High Court of Madras in the case of B. Kishore Kumar Vs. DCIT 52 taxmann.com 449 with regard to the statement given by the assessee. Section 69A, read with sections 143, 153, 153A of the Income-tax Act, 1961 - Unexplained moneys (Admission in sworn statement) - Assessment years 2001-02 to 2007-08 - Assessing Officer made additions as undisclosed income on basis of sworn statement .....

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sclosed income - Held, yes [Paras 5,6 & 7] [In favour of revenue] The ld. DR vehemently supported the order of the AO. On the other hand the ld. AR submitted that if the depreciation and interest element is reduced then the profit is higher than the rate estimated by the AO. The AO failed to bring any defect in the books 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 r .....

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he addition shall not stand. The submission of ld. AR is that the profit ratio is the same as quoted by the AO i.e. 3.50% if we eliminate the interest 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. In this connection .....

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nfer that the proportion between the turnover and the profits remains unaltered. But there was no institution of any such comparison by the ITO since he did not depend upon the estimation of the profits of the earlier years. His estimation depended on a formula evolved for other assessees without a disclosure of its basis or the grounds for the belief that they were comparable cases. The Appellate Tribunal which made its estimate by an entirely new process bestowed no thought to the question whe .....

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aterial 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 of above we do not find any reason to interfere in the order of the ld. CIT(A). Accordingly, we uphold t .....

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and transportation Rs.80,05,927/- Rs.68,02,328/- Stone picking & stacking expenses Rs.43,22,000/- Rs.32,26,640/- Overburden / coal transportation expenses Rs.1,48,82,580/- Rs.1,48,82,580/- Overburden removal expenses Rs, 78,62,550/- ₹ 33,38,800/- Forestation expenses ₹ 23,46,196/- ₹ 23,46,196/- Total Rs.3,05,96,544/- The Assessing Officer, during assessment proceedings, observed that the addresses to all the parties to whom the payment is made is the same as the address of .....

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