TMI Blog2018 (1) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... siness is highly volatile and prices are quite fluctuating year to year based on cropping success, monsoons and several other factors involved. Thus just increasing the Gross Profit based on some average of earlier year’s rates without any reasonable basis was uncalled for. We do not agree with the A.O‘s estimation and hold that the addition made needs to be restricted to ₹ 1,50,000/ - to cover up for the possibility of certain expenses being unvouched or fully for business purposes. The balance addition of ₹ 10,94,635/- is directed to be deleted. Since the addition is being made to the Net profit of the assessee, the disallowances in other expenses shall be deemed to be covered in this addition as the rejection of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer was also made on totally estimated basis although books of account were duly audited by Chartered Accountant. The CIT(A), Kota had also accepted the fact in their respective order itself that addition made by Assessing Officer was on totally unreasonable basis. 2. The appellant prays that the addition of ₹ 1,50,000/- which was not deleted by the CIT(A), Kota be deleted. 5. The only issue involved in the appeal is restricting the addition of ₹ 1,50,000/- by the ld. CIT(A). The ld. CIT(A) has decided the issue by holding as under: I have gone through assessee s submission and AO s findings. From a perusal of the facts of the case, it is apparent that the assessee is dealing in all types of agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the A.O for which no proper explanation was there. Thus, the admitted facts of the case are that the assessee who is a food grain dealer, did not furnish proper and relevant supporting evidences of hammali, discount expenses before the assessing Officer as well as stock details. Under the circumstances of the case, the decision of the A.O to resort to the provisions of Section 145(3) of rejecting the books of accounts cannot be faulted. However, even if the fall in G.P, rates the stock register not being maintained quantity wise are to be considered as discrepancies for the purposes of rejection of books of accounts, the basis of estimation of profits has to be reasonable and not arbitrary. In case of Mysore Fertilise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) Ltd. v. CIT [1995] 80 Taxman 184 (Gauhati) that additions to the profits of the assessee made solely on the ground that it was low without giving a specific finding that the accounts of the assessee were not correct and complete, or that the income could not be properly determined and deduced from the accounting method employed by the assessee, is not justified. The mere fact that there was a less rate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition. In a landmark decision, the Hon ble Delhi High Court has dealt with the issue elaborately. In the case of CIT vs Smt. Poonam Rani [2010] 192 TAXMAN 167 (DELHI), wherein the Officer had rejected the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the addition is being made to the Net profit of the assessee, the disallowances in other expenses shall be deemed to be covered in this addition as the rejection of the books of accounts has been confirmed. This Ground of appeal is partly allowed. 6. While pleading on behalf of the assessee, the ld. AR has reiterated the arguments as made before the ld. CIT(A). On the other hand, the ld DR has relied on the orders of the authorities below. 7. The Bench have heard both the sides on this issue. From perusal of record, it is noted that the ld. CIT(A) has passed a speaking order and no contrary material whatever reported by ld. A.R.. Therefore in absence of any such material against the findings of the ld. CIT(A), we concur with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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