TMI Blog2017 (10) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... dit sales due to cash discount offered. The allegation of the Assessing Officer regarding the understatement of cash sales by the assessee thus was not well founded and the same was not based on any concrete or cogent material. Keeping in view all these facts of the case, we find no infirmity in the impugned order of the Ld. CIT (A) deleting the addition made by the AO on account of the alleged understatement of cash sales by the assessee and upholding the same, we dismiss ground no 5 of the revenue’s appeal. Addition on account of the alleged low gross profit shown by the assessee on the sale of TMT Bars - Held that:- No basis whatsoever was given by the AO for applying the GP rate of 15% except stating that it is a common knowledge that TMT bars are not sold below 15% of GP. This addition thus was made by the AO arbitrarily on the basis of the conjectures and surmises and the Ld. CIT (A), in our opinion, is fully justified to delete the same. - I.T.A. No. 592/Kol/2014 - - - Dated:- 25-10-2017 - Shri P.M. Jagtap, AM And Shri N.V. Vasudevan, JM For The Revenue : SAhprpi eSaarlalonncge sY bayd:e n, Addl. CIT appearing For The Assessee : Shri A.K. Tulsiyan, FCA appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer was also of the opinion that the charges were recovered mainly from the buyers in cash and not accounted for and therefore the transportation cost was inflated. The appellant has submitted that the supplier of cement M/s. Lafarge India Pvt. Ltd. does not bear any expenditure in respect of delivery, loading and unloading etc. The Assessing Officer has not brought any material on record to prove that the supplier has borne part of the charges incurred by the appellant towards delivery, loading and unloading of the supplies made to it. The Assessing Officer has only passingly commented that the appellant recovers delivery charges on sales from the buyers in cash and does not account for the same. Needless to add, even in respect of this comment of the Assessing Officer there is no evidence brought on record. There is also considerable force in the appellant s submission regarding the reasonableness of the total carriage inward expenses of ₹ 4618747/- in the light of the total delivery of 454102 bags of cement to the appellant from New Alipore Railway Sidings, the subsequent carriage to the godown of the appellant at Raipur and the applicable rates of the truck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery charges were quite fair and reasonable having regard to the total quantum of material handled by him. At the time of hearing before us, the learned DR has not been able to raise any material contention to dispute the facts and figures furnished by the assessee in this regard. Keeping in view these facts and figures furnished by the assessee as well as having regard to the other aspects of the matter, we find ourselves in agreement with the Ld. CIT (A) that adhoc disallowance of 50% made by the AO out of carriage inward and delivery charges was not sustainable and upholding his impugned order deleting the same, we dismiss ground no 2 to 4 of the revenue s appeal. 8. The issue involved in ground no 5 of the revenue s appeal relates to the deletion by the Ld. CIT (A) of the addition of ₹ 3931175/- made by the AO on account of understatement of cement sale made in cash. 9. During the course of assessment proceedings, it was noticed by the AO that the gross profit and net profit shown by the assessee from the business of purchase and sale of cement was ridiculously low at 3.3% and 0.56% respectively. On further scrutiny, he found that 157247 cement bags were sold by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries vs ACIT II, Jalpaiguri wherein it was held that there is no finding in the assessment order in respect of to the fact that the assessee s method of accounting is not a regularly employed method or whether his income, profits or gains cannot be deducted or accounts are incomplete or incorrect in the present case. In the absence of this finding and in the absence of rejection of books of account, we are unable to accept that the Assessing Officer has rightly estimated the gross profit . As evident from the appellant s submissions reproduced above, some of the cash sales were also affected at rates higher than the rates at which sales were made on the same dates for which cheque payments were received. The appellant has also disputed the Assessing Officer s finding that major part of the sales was made in Rajpur Sonarpur Municipality and Ramkrishna Mission Residential Cottage and explained why the credit sales to Rajpur Sonarpur Municipality were at higher rates i.e. in view of delayed payments by them. It has been pointed out that 33.2% of the total sales amounting to ₹ 36451610/- were made to M/s. Ashok Exporters and Importers in respect of whom the sale price wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in some instances, the addition made by the Assessing Officer of ₹ 3931175/- by assuming that the selling price of 157247 cement bags sold in cash was understated by ₹ 25/- per bag cannot be justified and is deleted. 11. The learned DR strongly relied on the order of the Assessing Officer in support of the revenue s case on this issue. He submitted that there was an understatement of sale price by the assessee in case of sale of cement in cash as specifically pointed out by the AO. He contended that the Ld. CIT (A) however overlooked this vital aspect and allowed relief to the assessee on this issue by accepting the submissions of the assessee as it is. The learned counsel for the assessee, on the other hand, strongly supported the impugned order of the Ld. CIT (A) giving relief to the assessee on this issue and submitted that the detailed submission made by the assessee before the Ld. CIT (A) duly supported by the relevant facts and figures may be taken into consideration while deciding this issue. 12. We have considered the rival submissions and also perused the relevant material available on record. It is observed that no material or specific defects were po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the facts of the case and the appellant s submission. I find that the Assessing Officer has absolutely no basis for making the huge addition of ₹ 1757796/- on account of alleged understatement of gross profit margin. No evidence has been brought on record by the Assessing Officer that the trading results have been manipulated, purchases have been inflated or sales have been suppressed in respect of the TMT Bars. The only reason given by the Assessing Officer for making the addition is that it is common knowledge that Durgapur Manufactured TMT Bars are not sold below a price which will ensure 15% GP margin. Such an addition cannot be anything more than a conjecture or surmise. In view of the established position of law as also enunciated in the case laws cited by the appellant, assessments cannot be made on mere suspicions or bare guess and gross profit cannot be estimated in the absence of proper rejection of books of account. Hence, the addition of ₹ 1757796/- on account of alleged low GP from sales of TMT Bars declared by the appellant is deleted. 15. We have heard the arguments of both the sides and also perused the relevant material available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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