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TMI Blog2017 (3) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... come-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in allowing set off of additions sustained on account of Gross Profit addition from the disallowance of claim of loss claimed account of flood. 3) On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4) It is therefore, prayed that the order of the Ld. Commissioner of Income- Tax (Appeals)-XIV, Ahmedabad may be set-a-side and that of the order of the Assessing Officer be restored. 3. We will first take up Revenue's appeal. 4. At the outset ld. counsel for the assessee submitted that appeal of the Revenue is to be dismissed in lieu of CBDT Instructions no.20/2015 dated 10.12.2015 as the tax effect is less than Rs. 10 lakhs. 5. Ld. Departmental Representative could not controvert the submissions of the ld. Authorised Representative and accepted that the appeal of Revenue is to be dismissed on account of low tax effect. 6. We have heard the rival contentions and perused the record. Revenue is in appeal raising various grounds. However, both the ld. representatives have agreed to the fact that tax effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 145(3) of the Act and estimated profits by applying gross profit @ 25% as against 20% shown by assessee and after making other additions and disallowance totaling to Rs. 46,07,566/- assessed the income at Rs. 42,45,186/-. Assessee's total income was computed by Assessing Officer in following manner :- Income from Business or Profession Net loss as per Profit & Loss A/c: Less: (-) Rs. 3,63,930 Less : Disallowable Donation Rs. 1550 (-) Rs. 3,62,380 Add : Addition (i) On account of GP Rs.20,37,059 (ii) Out of unsecured Loans U/s 68 isallowance Rs. 3,52,015 (iii) Out of Flood Loss Rs.15,43,049 (iv) Out of Job Wofk Expense Rs. 3,00,088 (v) Out of unexplained Expenses Rs. 79,542 (vi) Out of Bad Debt Claim Rs. 2,95,812 Rs.46,07,566 TOTAL INCOME Rs.46,45,186 10. Aggrieved, assessee went in appeal before ld. Commissioner of Income Tax(A) and partly succeeded. 11. Aggrieved, assessee is now in appeal before the Tribunal raising following grounds :- 1) On the facts & in the circumstances of the case it is most respectfully submitted that the Hon'ble CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative also submitted that books of accounts of assessee are regularly audited. Assessee is registered under the Excise Act, VAT return have been filed, quantitative details were attached with the audit report and in view of loss due to goods damage in flood gross profit rate shown by assessee was correct and ld. Commissioner of Income Tax(A) erred in sustaining estimated gross profit by applying 23% as against 20%. 14. On the other hand, ld. Departmental Representative vehemently argued supporting the orders of lower authorities. He submitted that assessee was unable to provide quantitative details even on request at several times. 15. We have heard rival contentions and perused record placed before us. Assessee is aggrieved against ld. Commissioner of Income Tax(A)'s order sustaining estimated gross profit @ 23% as against 25% estimated by ld. Assessing Officer whereas assessee has disclosed gross profit @ 20% in its regular audited books of account. We observe that ld. Commissioner of Income Tax(A) estimated 23% gross profit rate by taking note of gross profit rate of 3 years by observing as follows :- Decision : I have carefully perused the findings of the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the food has definitely effected the profitability of the company in the current year. In view of the above mentioned facts-and circumstances, I am of the considered opinion that the G. P. rate of 25% applied by the A. Q. is on" higher side. The appellant has not furnished quantitative details-and stock register and, therefore, rejection of books of accounts have been upheld in the preceding discussion. In these circumstances, the G. P. for the current year has to be estimated on the basis of details available. The G. P. shown by the appellant is 20% and the A. O. has estimated it at the rate of 25% by taking the average of earlier years. In view of peculiar fact such as floods and higher ratio of own manufactured" goods, it would be reasonable to adopt the G.P. rate of 23% for the current year. Accordingly, by applying this ratio on total sales of Rs. 4,29,22,364/~, the G.P. earned by the appellant should come to Rs. 98;72,144/-. The appellant' has shown G.P. of Rs. 86,93,532/-. Accordingly, the addition is reduced Jo Rs. 11,78,612/- and the balance is directed to be deleted. The ground pf appeal is accordingly partly allowed. 16. From the order of ld. Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was flood on 29.07.2006 and as a result of which the assessee suffered heavy losses. Against the total claim of loss of Rs. 58,99,205/-, assessee received a cheque of Rs. 43,56,156/- and the remaining amount of Rs. 15,43,049/- was transferred to Profit & Loss Account under the head "loss incurred during flood". During the course of assessment proceedings, the ld. Assessing Officer examined the surveyor's report; as per which safe stocks was valued at Rs. 16,93,596/-, but the assessee claimed that the impugned safe stocks was having no market value as they were chemicals which are water soluable and therefore, there was genuine loss of Rs. 15,43,049/-. However, ld. Assessing Officer was not convinced with this reply and, taking the basis of surveyor's report, was of the view that the claim amount received by the assessee was the actual flood loss and the remaining amount of Rs. 15,43,049/- has been intentionally debited to Profit & Loss Account to reduce income and accordingly reducing the tax liability. 19. Aggrieved, the assessee went in appeal before the ld. Commissioner of Income Tax (Appeals) and partly succeeded as ld. Commissioner of Income Tax(A) gave telescopic benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Commissioner of Income Tax(A) has also confirmed the observations of the ld. Assessing Officer, but gave telescopic benefit of the addition sustained on account of gross profit estimation which was upheld at Rs. 11,78,612/- and sustained the remaining disallowance. We further observe that while adjudicating Ground No.2 relating to gross profit disallowance, we have allowed assessee's plea and deleted the impugned addition on account of gross profit estimation and therefore, the ld. Commissioner of Income Tax(A)'s order will not have any impact, as observed, while adjudicating Ground No.3. 24. Now, coming to the factual part; undisputedly, the assessee has suffered loss due to flood, but even then sales and gross profits have almost doubled in this year which coupled with the fact that assessee is registered under Excise Department and regular returns are being filed and movement of goods are recorded in the excise records and also regular Value Added Tax returns are furnished. There is no finding on the part of the Revenue to disregard the above facts and no mistake has been observed in the statutory record of Excise and VAT returns. We also find that the assessee is dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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