TMI Blog2021 (8) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the assessee are only book entries and not genuine business transactions but at the same time recalculated the net profit at 1.5% of the sales turnover by rejecting the books of account which is not permissible under law. AO also stated that since M/s. MSA Engineering Pvt. Ltd. was a related party the tax auditor should have pointed out it out in tax audit report u/s 40A(2)(b) of the Act but at the same time has resorted to section 40A(2)(b) to observe that the purchases from M/s. MSA Engineering Pvt. Ltd. were not made at arm s length. When the factual findings have come on record that assessee has not been transporting, inspecting, loading and unloading of goods, the findings given by AO are based upon conjectures and surmise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual taxpayer drawing salary from M/s. India Intermesh Limited in the capacity of a Director of the company. Assessee is also engaged in the business of wholesale trading of casting, spare parts and other engineering components under the name style of proprietorship concern M/s. Intelligent Engineering Solutions. Assessee filed return of income at ₹ 75,59,590/- which was subjected to scrutiny. 3. Assessing Officer (AO) noticed from the verification of profit loss account, audit report and books of account of the assessee that proprietorship concern of the assessee, M/s. Intelligent Engineering Solutions achieved sales of ₹ 193,17,32,850/- from the purchases to the tune of ₹ 1,91,82,25,047/- but there are no corres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A), operative part thereof is extracted for ready perusal as under :- 8. I have gone through the submissions of the appellant and facts of the case. The following facts emerged from the submission of the assessee- - The assessee is a shareholder in M/s MSA Engineering Pvt. Ltd. and he is also Prop. of M/s Intelligent Engineering Solutions and supplies the goods to Energo Engineering Projects Ltd. The goods were neither transported by him nor he under took loading or unloading. He simply procures order, sources the goods from MSA Engineering Pvt. Ltd. which Are transported by MSA Engineering Pvt. Ltd. to Energo Engineering Projects Ltd. - Since he is only procuring the order for MSA Engineering Pvt. Ltd. which is shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party by whom the goods were manufacture. Nor does it seem relevant for the purpose of assessment, of a trader. - The Assessing Officer further pointed out that registered address of the firm was a residential house. Since the assessee is only procuring the orders. The residential house has been given as the correspondence address, since it is not the case of the A.O. that it was used as goddown for commercial premises. - The last argument of the Assessing Officer that the books of accounts showed opening and closing stock although there was no godown. The assessee has explained that the stock represented the goods in respect of which the orders have been received and which were in the process of supply, he states that the stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Considering the facts and circumstances of the case and following the judicial pronouncement relied upon by the assessee, the rejection of the books of accounts is uncalled-for and is without any basis. Therefore addition on account of re-estimating the profit @ 1.5% is deleted. 10. It is a fact that the assessee is only a mediator in the case and he is also a director of a company MSA Engineering Pvt. Ltd. He could have procured the orders as a director of MSA Engineering Pvt. Ltd. and therefore there was no need to rout the same through Mis Intelligent Engineering Solutions. However the Assessing Officer cannot step into the shoes of the Assessee to manage his affairs. But the matter of fact remains that, M/s Intelligent Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igent Engineering Solutions and supplied the goods to Energo Engineering Projects Ltd.. It is also undisputed fact on the file that goods were neither transported by him nor he undertook loading and unloading, rather his job is to procure orders and sources the goods from MSA Engineering Pvt. Ltd. which was transported by MSA Engineering Pvt. Ltd. to Energo Engineering Projects Ltd. 9. When ld. CIT (A) has arrived at the factual finding that assessee himself has not transported the goods nor carried out loading and unloading, the findings returned by the AO that the transfers made by the assessee are merely book entries are not sustainable. AO is blowing hot and cold in the same breath because at one point of time he has observed that tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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