TMI Blog2018 (1) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer for computing the average G.P. of past years to be adopted for the year under consideration to estimate the income of the assessee. Addition on account of interest charged from the related parties @ 6% as against the interest paid by the assessee @ 12% - assessee has given loan to relatives and charged 6% interest as against the interest paid by the assessee on borrowings @ 12% - Held that:- Assessee has raised various contentions before the ld. CIT(A) including the contention that the assessee’s own interest free funds are more than the advance given to the related parties and therefore, no disallowance on account of interest is called for due to short charging of interest. Further the assessee has pointed out before us that out of five debtors to whom the advance was given. The assessee charged the interest @ 12% from one Shri Rahul Bhandari and therefore, to the extent of loan given to that person, no disallowance is called for. All these facts and contentions were not properly examined by the authorities below, therefore, this issue requires a proper verification and afresh adjudication at the level of the Assessing Officer. - ITA No. 336/JP/2015 And ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k and closing stock shown in the books of account. The Assessing Officer further noted that the tax auditor in his tax audit report has also commented that no such record is maintained by the assessee. Hence in absence of stock record, the valuation of the stock shown by the assessee was not verifiable. Accordingly, the Assessing Officer invoked the provisions of Section 145(3) of the Income Tax Act, 1961 (in short the Act) and rejected the book result of the assessee. The Assessing Officer then estimated the income of the assessee by applying G.P. rate of 17% on the turnover. 3. On appeal, the ld. CIT(A) has upheld the action of the Assessing Officer of rejection of books of account as well as the G.P. rate @ 17% applied by the Assessing Officer. 4. Before us, the ld AR of the assessee has submitted that the entire sale of the assessee is export and therefore there is no scope of under valuation of closing stock by the assessee. Further the assessee is getting the job work done through outsourcing to the parties. He has further submitted that for the A.Y. 2006-07, this Tribunal has considered an identical issue and directed the Assessing Officer to apply G.P. rate @ 7.50%. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e current year. Accordingly, we set aside this issue to the record of the Assessing Officer for computing the average G.P. of past years to be adopted for the year under consideration to estimate the income of the assessee. 7. Grounds No. 3 and 4 of the assessee s appeal are regarding the addition made by the Assessing Officer on account of interest charged from the related parties @ 6% as against the interest paid by the assessee @ 12%. The assessee has given loan to relatives and charged 6% interest as against the interest paid by the assessee on borrowings @ 12%. The Assessing Officer disallowed the proportionate interest and made the addition of ₹ 15,27,073/- on this account. 8. Before us, the ld AR of the assessee has submitted that the Assessing Officer has made this addition by assuming wrong facts. He has pointed out that the assessee has charged interest @ 12% from the some of the related parties which has not been taken into consideration either by the Assessing Officer or by the ld. CIT(A). The ld AR has further contended that the financial position of the related persons were not good and even the recovery of principal was doubtful hence, on commercial exped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the appeal of assessee for the A.Y. 2012-13, the assessee has raised following grounds of appeal. 1. That the Ld. CIT (Appeals) has erred in law and facts in not holding that assessment order is invalid in law. 2. That the Ld. CIT (Appeals) has erred in law and facts in upholding the rejection of books of account due to non maintenance of stock and fall in G.P. ratio without considering the fact that maintenance of stock register was not feasible, all the components of trading account are verifiable and fall in G.P. Rate explained as there were major sales to Export parties including sale of 85% around to one party. 3. That the Ld. CIT (Appeals) has erred in law and facts not considering the contents on merits in respect of trading additions of ₹ 10,60,550/-. 4. That the Ld. CIT (Appeals) has erred in law and facts in not holding that interest income is to be taxed as per real income theory as interest receipts were more as compared to interest paid in the year in which advances given to family members and accordingly interest receipts were taxed as business income. 5. That the Ld. CIT (Appeals) has erred in law and facts in confirming part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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