TMI Blog2018 (4) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of documentary evidence. - Held that:- The additional documents filed by the assessee are explaining the dispute which is already available on record. Therefore, we hold that the additional documents filed by assessee are necessary for disposal of dispute in hand. Therefore, we admit the same and restore the issue back to the file of AO for fresh adjudication in accordance with law and after considering the fresh evidence filed by assessee. Thus, the ground of assessee is allowed for statistical purpose in terms of above direction. - ITA No.1344/Kol/2011 - - - Dated:- 4-4-2018 - Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Appellant : Shri U. Dasgupta, Advocate For The Respondent : Shri S. Dasgupta, Addl. CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-Asansol dated 03.08.2011. Assessment was framed by ITO Ward-2(1), Asansol u/s 143(3)/144A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 05.12.2008 for assessment year 2007-08. Shri U. Dagupta, Ld. Advocate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - only being 2% an amount of ₹9,20,93,707/- only. Thus, the AO treated the difference amount of ₹13,35,424/- ( 18,41,874.00 the gross profit already declared ₹ 5,06,450.00) as low gross profit in the business of assessee and accordingly added to the total income of assessee. 4. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that profit shown by him in its books of account were duly audited and audit report was duly submitted along with return of income. The AO held that gross profit declared by assessee is low without having any doubt on the purchase and sales as disclosed by him in his books of account. As such, the AO has not brought anything on record suggesting that profit declared by assessee was not correct. The assessee also submitted that profit has been estimated without rejecting the books of account. However, Ld. CIT(A) after considering the submission of the assessee allowed appeal partly by observing as under:- As per the assessment order, I do not find that the AO has rejected the books of account. It is also seen that though the AO has doubted the veracity of the books, ultimately he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee from TA has been confirmed by TA then the amount of purchase shown by assessee cannot be rejected. There is only single party from whom the assessee purchased the lottery tickets. The audited financial statements were duly furnished during the course of assessment proceedings which are placed on pages 33 to 45 of the paper book. The assessee in his audited financial statement has declared the gross profit @ 0.53% and the same should be accepted for the year under consideration as the purchase from TA stand confirmed. Ld. AR further stated that Ld. CIT(A) has not considered the profit declared in the past which was also accepted by the Revenue. The assessee in the earlier years has declared the profit in the range of 0.27% to 0.53% only. Therefore the profit estimated by the ld. CIT-A on the basis of comparable cases is not justifiable. The AO during the course of assessment proceedings did not ask for the details of the party to whom the sale were made. Therefore, AO has wrongly assumed that the address of the debtors were not available. Ld. AR also submitted that the profit has been estimated without rejecting the books of account u/s 145(3) of the Act. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce the necessary documents before the AO despite several opportunities provided to assessee. Secondly , the profit declared by assessee in its books of account would be accepted without verification / production of the books of account before the Authorities Below. In our considered view, such situation is not admissible in the given facts and circumstances. Thus, we hold that the act of estimation of the profit is correct and reasonable. Now, the issue arises what should be the basis for estimating the profit in the given facts and circumstances. We note that the AO has admitted profit @ 2% without any basis, whereas Ld. CIT(A) directed the AO to estimate the profit based on comparable cases and after making suitable changes. From the above finding of Ld. CIT(A) we note that Ld. CIT(A) has not directed to consider the financial history of the assessee in its own case, rather directed to take the average of comparable cases for determining the gross profit. In our considered view, the history of the assessee becomes very important once the profit has to be determined on estimated basis. Though there was no scrutiny proceeding u/s 143(3) of the Act in earlier years but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment order was indeed made by M/s Tiger Associate as bulk tickets from the cost of ticket supplied to the appellant. No payment or adjustment of bonus in the appellant s account has been done by M/s Tiger Associates as per their certificate. But, if prices of tickets have been adjusted then it would appear that the appellant has been supplied tickets at a lower rate which he is free to encash at market price and pocket the enhanced difference. As per further submission made before me, the appellant has claimed that The stockiest adjust the amount of super tickets special tickets from the purchase cost of tickets and in the same way sub-stockiest adjust this amount from the purchase value of tickets. So there is no any profit element includes in super tickets and special tickets. It would therefore appear that this adjustment is being carried forward along the chain of supply. However, this is precisely the question that AO has raised. In his words, the sole creditor, Tiger Associates has adjusted the agency bonus fully in the books of the assessee only. But, it is not ascertainable that how much agency bonus had been distributed among his debtors. Because, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) erred in confirming the order of AO by sustaining the addition of ₹4,31,155/- u/s. 40A(3) of the Act. 13. During the course of assessment proceedings, AO observed that assessee has made the cash payment exceeding to ₹20,000/- to TA in contravention to the provision of Section 40A(3) of the Act. Accordingly, AO disallowed the same of ₹86,231/- being 20% of ₹3,31,155/- and added to the total income of assessee. 14. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the order of AO by observing as under:- 6. Ground No.4: In this ground the appellant is disputing the Assessing Officer's addition u/s. 40A(3). The Assessing Officer s case is that cash had been paid by the appellant directly to M/s Tiger Associates above the statutory limits. The appellant s case is that these amounts were directly collected by M/s Tiger Associate from the debtors of the appellant. However, I do not find Assessment Year evidence of such claim being submitted by the appellant. The addition made is, therefore, confirmed. This ground of appeal is dismissed. Being aggrieved by this order of Ld. CIT(A) assessee has come up an appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he genuineness of the transactions was not doubted or disputed. The ITO has to take a pragmatic view of the matter. The ITO should take a practical approach to problems and strike a balance between the direction of law and hardship to the assessee. He should not enmesh himself in technicalities. After all, the object is not to deprive the assessee of the deduction which he is otherwise entitled to claim. Where the amount was paid in cash or received in cash, the Assessing Officer has to find out whether the transaction is genuine or not and if he finds that the transaction is genuine, he should allow the deduction. The CBDT circular No. 220 dt. 31st May, 1977 is not exhaustive; it is only illustrative and the Assessing Officer has to take into account the surrounding circumstances, considerations of business expediency and the facts of each particular case in exercising his discretion either in favour or against the assessee. There may be an oral agreement between the assessee and the seller for payment in cash. A seller may not be willing to accept cheques; cash payment may be made at the request of the payee who is also an assessee and a certificate to that effect filed; absence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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