TMI Blog2017 (2) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of trading in Mentha Oil. Accordingly, he arrived at the conclusion that profit returned by the appellant is on the lower side and after rejecting the books of accounts u/s 145(3) of the Act, 1961, he applied the gross profit rate of 0.65% on total turnover of ₹ 1,16,38,55,100/- based on the average gross profit rate arrived at on the profit return by other concerns, which comes to ₹ 75,65,058/-. Accordingly the difference in the profit return and the one assessed which comes to ₹ 66,54,087/- was added to the income of the appellant. It is this assessment which was not accepted by the Commissioner of Income-tax (Appeals) whereas the Tribunal has concurred with the arguments of Departmental Representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2012-13, allowing the appeal of the Revenue. The appellant is the Proprietor of M/s Bahubali Traders a proprietorship firm and the assessee which derives its income from trading of menthol disclosed turn-over of ₹ 1,16,38,55,100/- with gross profit of 0.08% and net profit of 0.007% in its income-tax return for the year 2012-13. Assessing officer did not accept the gross profit return of the assessee which according to him was much lower in comparison to other assessees engaged in the same business in the same area. The relevant extract of the order passed by the Assessment Officer reads as under:- The comparative Chart of following assessee carrying out same business in same financial year is as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on total turnover of ₹ 1,16,38,55,100/- which comes to ₹ 75,65,058/-. The difference ₹ 66,54,087/- (75,65,058 - 9,10,971) is added to the income of the assessee. (Addition of ₹ 66,54,087) During the course of assessment proceedings, it has been noticed that the assessee has made ₹ 55,944/- as withdrawal to meet out his house hold and other personal expenses. The explanation offered is found satisfactory to the some extent. Therefore, keeping in view the standard of living of the assessee, his personal expenses is estimated at ₹ 2,16,000/-(Rs.18000 P.M. x 12) for the year under consideration. The balance amount of ₹ 1,60,056/-(216000-55,944) is hereby treated as withdrawal out of business inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is far more than the turnovers of Shri Rakesh Kumar, Shri Balram Gupta and Shri Kapoor Babu, whereas the turnover of Shri Sachin Jain is nearly twice the appellants' turnover. It may also be noted here that the appellant is bound by a tie-up with M/s Neptune and therefore, did not have the same freedom to negotiate as the other parties chosen by the Ld. AO. In view of these peculiar situations applicable to the appellant, the adoption of average GP of 0.65% by the Ld. AO cannot be sustained more so, when the AO has not recorded any defects in terms in the books of accounts maintained by the appellant. However, the GP of 0.080% shown by the appellant, does not appear reasonable and cannot, therefore, be upheld, being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by learned counsel for the appellant before us was that the Tribunal has mechanically passed the impugned order without considering the pleas raised before it, therefore, the same suffers from non-application of mind. The tribunal had erred in recording a finding that since menthol is not a restricted item which could be sold only to a particular buyer and completely overlooking the fact that the appellant under agreement dated 01.04.2011 is a consignment agent for M/s Nector bound to sell all the menthol procured by it only to the said dealer and the genuineness and validity of the agreement between the appellant and M/s Nector was not doubted at any level therefore, the judgment of the Tribunal is not sustainable. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts u/s 145(3) of the Act, 1961, he applied the gross profit rate of 0.65% on total turnover of ₹ 1,16,38,55,100/- based on the average gross profit rate arrived at on the profit return by other concerns, which comes to ₹ 75,65,058/-. Accordingly the difference in the profit return and the one assessed which comes to ₹ 66,54,087/- was added to the income of the appellant. It is this assessment which was not accepted by the Commissioner of Income-tax (Appeals) whereas the Tribunal has concurred with the arguments of Departmental Representative and the finding of the Assessing Officer and rejected the view of the Commissioner Income-tax (Appeals) on the ground that Menthol is not a restricted item which could be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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