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TMI Blog2019 (6) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... ef may please be granted by quashing the re-opening proceedings. 2. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in confirming the trading addition of Rs. 43,341/- (1,25,000-81,659) after adopting the N.P. rate of 5% on an estimated sales of Rs. 25,00,000/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition amounting to Rs. 43,341/-. 3. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO regarding addition of a sum of Rs. 3,00,000/- u/s 68 of the IT Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 3,00,000/-." 3. During the course of hearing, the ld. AR did not press ground no. 1. Hence, the same is dismissed as not pressed. 4. In ground No. 2, the assessee has challenged the action of the Assessing officer in confirming the trading addition of Rs. 43,341/- after adopting the N.P. rate of 5% on an estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the assessee and in respect of addition of Rs. 43,341, the assessee is in appeal before us. 8. During the course of hearing, the ld. AR submitted that the provisions of section 44AF are special provisions for computing profits & gains of retail business. This section is a code in itself. If net profit of 5% or more is declared, the assessee is absolved from maintaining Books of Accounts. If less than 5% NP is declared, Books of Accounts are to be maintained u/s 44AA and the same are also to be got audited u/s 44AB. The sub section (1) mandates for acceptance of turnover "as declared by the assessee". Sub section (1) is reproduced below for ready reference: "44AF Special provisions for computing profits and gains of retail business (1) "Notwithstanding anything to the contrary contained in section 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five percent of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard who has vehemently argued the matter and took us through the findings of the lower authorities which we have already noted above. 13. We have heard the rival contentions and perused the material available on record. The limited issue under consideration is what should be the turnover of the assessee for the year under consideration. The assessee has reported a turnover of Rs. 13,82,346 and the undisclosed balance with the debtors as on 31 March 2004 comes to Rs. 13,20,574 basis the diary found during the course of survey which has been owned up by the assessee. There is nothing on record to show that corresponding sales relating to the undisclosed balance with the debtors as on 31 March 2004 forms part of the reported turnover and thus, the same is clearly the undisclosed turnover of the assessee. Given that the Revenue is not in appeal, we are of the view that the ld CIT(A) is reasonable enough to determine the turnover of the assessee at Rs. 25,00,000. In the result, the ground of appeal is dismissed. 14. Regarding Ground No. 3 wherein the assessee has challenged the addition of a sum of Rs. 3,00,000/- U/s 68 of the I.T. Act, 1961. The Assessing Officer made the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his customers a period less than the credit he enjoys. Thus, in assessee's business model, the requirement of capital was very meager. The meager capital required was accumulated over the years and therefore no additional capital is required for running the business. 19. Without prejudice to above, it is submitted that ld. CIT(A) has upheld the rejection of books. Once the books are rejected, no further addition can be made u/s 68. The issue is covered by the Hon'ble Jurisdictional High Court in the case of CIT vs. G.K. Contractor [2009] 19 DTR 305 (Raj) wherein it was held as under: "...However, in our considered opinion, even if the assessee has failed to discharge his onus of proof in explaining the cash credits shown in the books of account as "market outstanding", the AO having estimated the higher profit rate on total contract receipts after rejection of the books of account invoking the provisions of s. 145(3), no separate additions can be made on account of unexplained cash credit under s. 68 of the Act of 1961..." It was submitted that the Tribunal in case of Elcon Drugs & Formulation Ltd vs. ITO - ITA No. 995/JP/2013 has also followed the decision of Hon'ble Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 3,00,000/-." 24. The ground no. 1 was not pressed during the course of hearing, hence the same is dismissed. 25. In ground no. 2, similar contentions have been raised by the ld AR as we have noted above in context of AY 2004-05. It was submitted that based on past history and average growth rate of 13%, the estimated turnover of the asssessee comes to Rs. 20,79,661 as against Rs. 35,00,000 estimated by the AO and which has been confirmed by the ld CIT(A). 26. It was further submitted by the ld AR that the ld. CIT(A) has erred in estimating the turnover at Rs. 35,00,000/-, on the observation that the assessee himself has admitted before ld. AO that the total of credit sales as per annexure A-4 comes to Rs. 27,66,751/-. In this regard it is submitted that ld. CIT(A) has not considered the sales return of Rs. 5,62,504/- which is evident from the details placed at PB 98-99. The amount admitted by the assessee is the total amount of the credit sales, excluding the amount of sales return. Hence, the assessee has not inflated the amount of sales in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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