TMI Blog2020 (4) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... past history of the assessee. In the case in hand when the assessee has declared GP at 1.39% of total turnover of ₹ 53.56 Cores out of which about 53 Core turnover is consisting of export of bullion. Thus when almost all the turnover of the assessee is an export of bullion then the margin/GP declared by the assessee at 1.39% is in the line with the profits prevailing in this trade. Neither the AO nor the ld. CIT(A) has appreciated this fact that about 99% of the turnover of the assessee is from trading in bullion, therefore, the addition made by the AO and sustained by the ld. CIT(A) is not justified and the same is deleted. - Decided in favour of assessee. - ITA No. 442/JP/2019 - - - Dated:- 27-1-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri S.L.Jain (C.A.) And Shri Ashok Kumar Gupta (Adv.) For the Revenue : Smt. Roonipal (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 12.02.2019 of the ld. CIT (A)-I, Jaipur for the assessment year 2013-14. The assessee has raised the following grounds:- 1. Assessment against CBDT Circular :- That on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are relevant and afford prima facie proof of the entries and the correctness. - Tolaram Daga vs CIT, (1966) 59 ITR 632, 636 ( Aggam) 5. Assessment based on mere conjecture is bad That on the facts and in the circumstances of the case Ld. CIT(A) has grossly erred in law and facts in confirming assessment based on mere conjecture, surmise or suspicion or irrelevant and inadmissible evidence and material is invalid and unsustainable in law. 6. Failure to Issue Proper Show Cause Notice :- That on the facts and in the circumstances of the case Ld. AO has grossly erred in law and facts in where he proposes to make additions or disallowances, the assessee would be given a fair opportunity to explain his position on the proposed additions/ disallowance in accordance with the principle of natural justice. In this regard the AO shall issue an appropriate show-cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences. Which is mandatory as per CBDT circular. 7. Interest levied u/s 234A, 234B and 234C That on the facts and in the circumstances of the case Ld. AO has grossly erred in law and facts in by c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hly arbitrary and unjustified when the ld. CIT(A) has accepted the fact that in the preceding years the assessee was doing trading in the precious and semi precious stone jevellery and the turnover of the assessee was very less whereas during the year under consideration the turnover is mainly from sale from export of the bullion as well as gold jewellery and therefore, the GP declared by the assessee in the preceding years cannot be compared with the GP under consideration when 99% of the sale is export of bullion. Thus, the ld. AR has submitted that the addition sustained by the ld. CIT(A) by considering the GP of the preceding two years is highly arbitrary when the assessee has already explained the deciding in GP is due to export of bullion consisting 99% of the total turnover and further sale of the gold jewellery in comparison to the sale of precious and semi precious stone jewellery in the preceding years. He has further contended that the total turnover for the year under consideration is ₹ 53.56 Crore in comparison to ₹ 2.72 Crore for the assessment year 2010-11 and ₹ 4.17 Crore for the assessment year 2011-12. Thus, the ld. AR has submitted that in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that while the past history becomes the relevant basis but if the AO wishes to tinker with the basis of past records, then some flaw has to be found by the AO in making some addition and, in the instant case under consideration, the purchases to the tune of ₹ 94,23,653/- was found to be bogus/unverifiable. As purchases to the extent of ₹ 94,23,653/- were not verifiable during the assessment proceedings and bills were obtained through accommodation entry providers which definitely results in higher GP rate. The higher gross profit will also take into account of the irregularities committed by the appellant in obtaining accommodation entries. The gross profit during the year is 1.39% onlyhas fallen from 11.45% and 14.96% in preceding years. For such a steep fall in gross profit, it was submitted by the appellant before the AO that the appellant started dealing in gold jewellery in comparison to earlier years, where sale was mainly gems and stone jewellery. It was also submitted that the appellant mainly purchased gold from corporation bank and exported 98.77% of goods out of total turnover. It is seen that the turnover of the appellant has substantially increased in com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 1.23% turnover of the assessee is representing the sale of jewellery. As per directions of the Bench the assessee has filed the details of exports from which it is clear that out of total turnover ₹ 53.56 Crore the turnover of trading in bullion is ₹ 52.96 Core and the turnover from sale of jewllery is ₹ 6,00,000/-. Therefore, in view of the facts and circumstances of the case when around 99% of the turnover of the assessee is from trading of bullion and purchases of bullion made from the Corporation Bank then the GP declared by the assessee at 1.39% is reasonable. The rejection of books of account would not be ifso facto result an addition if the assessee has declalred the profit in line with the prevailing profit in the trade /industry or in line with the past history of the assessee. In the case in hand when the assessee has declared GP at 1.39% of total turnover of ₹ 53.56 Cores out of which about 53 Core turnover is consisting of export of bullion. Thus when almost all the turnover of the assessee is an export of bullion then the margin/GP declared by the assessee at 1.39% is in the line with the profits prevailing in this trade. Neither the AO nor th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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