TMI Blog2017 (2) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We, therefore, uphold the findings of the Ld. CIT(A) and dismissed the appeal filed by the assessee. - Decided against assessee - ITA No 4344/MUM/2014 - - - Dated:- 31-1-2017 - SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) For The Appellant : None For The Respondent : Shri. B.S.Bist. ORDER PER RAM LAL NEGI, JM This appeal has been filed by the assessee against order dated 26/03/2014 passed by the Ld. CIT(Appeals)-16 Mumbai for the Asst. Year 2006-07, whereby the Ld. CIT(A) partly allowed the appeal of the assessee filed against penalty order dated 27/03/2012 passed u/s 271(1)(c) of the Income Tax Act, 1961 (for short the Act ). 2. Case was called for hearing, however, none appeared on behalf of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions was that as per the decision of Supreme Court in the case of Reliance Petroproducts (322 ITR 158), no penalty can be levied as mere rejection of claim does not amount to filing of inaccurate particulars of income or concealment of income. The A.O rejected the contentions of the assessee and levied penalty of ₹ 98,215/- u/s 271(1)(c) of the Act holding that the assessee company has deliberately claimed wrong deductions by furnishing inaccurate particulars of income. In appeal the Ld. CIT(A) following the directions of the ITAT given in quantum appeal order held that no penalty is leviable on addition u/s 2(24)(x) and penalty is required to be computed on the amount of understated income as worked out in the order of CIT(A). 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing thus excess sales of ₹ 71,17,808/-. The director of the company in the statement at the time of survey offered a sum of ₹ 71,17,808/- as additional income, but in the return of income, the said additional income was not declared . The case of the assessee is that in the return of income total sales declared by the assessee was ₹ 15,55,40,281/- which was more than total sales found by the survey party. The profit was also declared more than the total profit shown at the time of survey. The AO has however not accepted the claim on the ground that in the P L account filed with the return of income, the assessee had also claimed additional expenses including purchases amounting to ₹ 2,81,87,045/-. The AO has not acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the close of the accounting year when the survey was conducted. Therefore, in our view, the accounts of the assessee cannot be taken as reliable and in the absence of complete reconciliation between purchases and sales, the accounts have to be rejected as not reliable and gross profit has to be estimated. The total sales declared by the assessee is much more than the total sales found by the survey party and, therefore, no addition can be made on account of sales. However, GP rate has to be estimated after considering the past record of the assessee. On query raised by the Bench, the ld. AR filed comparative rate of GP and NP from which it is found that GP rate for the impugned assessment year was 28.83% whereas in the immediate precedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and supply of services. Further the profitability of the business depends upon the client being serviced whether in India or abroad as the amounts may be received in foreign currency and margin of profits are higher compared to local sales. Therefore the gross profit margin are not constant and are not comparable every year. The gross profit of the appellant is thus required to be estimated. During the course of appeal proceedings, the AR of the appellant stated that the appellant is agreeable to addition on the basis of average GP rate of the four AYs 2005-06 to 2008-09. However, since the ITAT have themselves concluded that the accounts for AY 2006-07 are not reliable, the average of the three AYs AY 2005-06, 2007-08 and 2008-09 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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