TMI Blog2022 (6) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment of the assessee concerned, and all other matters must be taken into account for fair and proper estimate which of course, would fall in the category of guesswork, but a honest guesswork. We are of the view that estimation made by assessing officer is not based on sound reasoning in comparison with the past results shown by the assessee. We note that in AY.2009-10, the assessee s audit results shows net profit at the rate of 5.12% and for A.Y.2010-11, net profit ratio is 4.32% and for AY.2011-12 the net profit ratio is 4.99%. Therefore, if we consider the average of these three years, the average net profit comes at 4.79%. Thus, based on past three years average net profit, the addition, on turnover ought to have been made by the assessing officer at the rate of 4.79%. As total turnover of the assessee comes at Rs. Rs.3,08,25,664/-( Rs.64,23,832 + Rs.84,75,415 + Rs.1,59,26,417) on which estimation should be made at the rate of average net profit @ 4.79%. Taking into account all these facts, we are not inclined to accept the contention of the Assessing Officer in any manner to make estimated addition @ 8%, hence, the assessee`s income should be estimated @ 5% of turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, after 1.4.1989, the AO has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Considering, these facts and circumstances, we note that the re-assessment u/s 144 r.w.s. 147 dated 21.03.2016 was rightly quashed by the ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. - ITA Nos.136 And 137/SRT/2020 - - - Dated:- 20-6-2022 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rajesh Upadhyay, AR For the Respondent : Shri J. K. Chandnani, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned cross appeals filed by the Assessee and Revenue pertaining to Assessment Year (AY) 2011-12, are directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Valsad [in short the ld. CIT(A) ] dated 28.02.2020, which in turn arises out of an assessment order passed by the Assessing Officer u/s.143(3) of the Income Tax Act, 1961 [hereinafter referred to as the Act ], dated 24.06.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 29.09.2011, declaring total income at Rs.7,33,530/-. Later on, the assessee`s case was selected for scrutiny under CASS and accordingly a notice under section 143(2) dated 03.08.2012, was issued and served on the assessee. In the assessment order, the assessing officer noted that contract receipts as per form 26AS was indicated to be Rs.2,23,50,249/- whereas the audited books of account indicated total contract receipts of Rs.1,59,26,417/- only. Thus, prima facie, it was observed by the assessing officer that there was suppression of contract receipt to the tune of Rs.64,23,832/-. It was also noted by the assessing officer that assessee had deposited cash of Rs.92,20,415/- in the saving bank account held with SBI Pardi Branch. It response to query by the assessing officer during assessment proceedings, the assessee had stated that he cash deposited cash of Rs.92,20,415/- in the saving bank account held with SBI Pardi Branch. In response to query by the assessing officer during assessment proceedings, the assessee had stated that cash deposits were from contract receipts and transfer from one bank to another bank. This contention was not accepted by the assessing officer on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.3,08,25,664/- Profit at the rate of 8% thereof Rs.24,66,053/- Less: Profit shown by the assessee Rs.7,86,505/- Addition on account of suppressed receipts Rs.16,79,548/- 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has computed the estimated addition based on gross profit ratio 12.89% (as compared to estimated net profit ratio at the rate of 8% computed by the assessing officer), on contract receipts of Rs.64,23,832/-, which comes to Rs.8,28,032/-. As regards cash deposit in SBI bank account at Rs.84,75,415/-, the ld CIT(A) made addition based on peak credit at Rs.2,35,501/-. Whereas, ld CIT(A) did not comment on the other contract receipts shown by the assessee in books of accounts to the tune of Rs.1,59,26,417/-, on which assessee has shown profit at Rs.7,86,505/- at the net profit rate of 4.93%. 7.Aggrieved, by the addition sustained by ld CIT(A), the assessee is in further appeal before us. 8. Shri Rajesh Upadhyay, Learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... past three years average net profit, the addition, on turnover ought to have been made by the assessing officer at the rate of 4.79%. 12.Besides, the contract receipts of Rs.64,23,832/-, is part of turnover of the assessee, however, ld CIT(A) applied gross profit ratio on these receipts which is not acceptable. The cash deposit in SBI bank account at Rs.84,75,415/- is also part of assessee`s turnover. Therefore, total turnover of the assessee comes at Rs. Rs.3,08,25,664/-( Rs.64,23,832 + Rs.84,75,415 + Rs.1,59,26,417) on which estimation should be made at the rate of average net profit @ 4.79%. Taking into account all these facts, we are not inclined to accept the contention of the Assessing Officer in any manner to make estimated addition @ 8%, hence, the assessee`s income should be estimated @ 5% of turnover of Rs. 3,08,25,664/-, which comes to Rs.15,41,283/-. As the assessee has declared net profit on turnover at Rs. 7,86,505/- therefore, we direct the assessing officer to make addition of Rs.7,54,778/- ( Rs.15,41,283- Rs. 7,86,505). Thus, ground Nos. 1 and 2 are partly allowed. 13. Coming to ground No.3 raised by the assessee, we note that assessing officer made addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The ld Counsel has explained that from para-12 of the original assessment order u/s 143(3) dated 24.01.2014, it is clear that receipts of Rs.64,23,832/- and Rs.84,75,415/- were duly considered while calculating total turnover and estimating profit @ 8% for addition of suppressed income at Rs.16,79,548/-. From the copy of reason recorded dated 10.07.2015, the ld Counsel has stated that assessment was reopened on the basis of the same receipts of Rs.64,23,832/- and Rs.84,75,415/-. Thus, ld Counsel demonstrated that both the figures of Rs.6423,832/- and Rs.84,75,415/- were taken in the total turnover in original scrutiny assessment and reopening of assessment again on the basis of same issues amounted to change of opinion not permissible under the provisions of Act. The Counsel has referred to decision of Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. 320 ITR 521 wherein the Hon'ble court held that reopening of assessments on the same set of facts and evidences available in the original proceedings are not valid in law. 17.On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court,(reported in 320 ITR 561(SC)) it was held that though the power to reopen under the amended section 147 is much wider, one needs to give a schematic interpretation to the words reason to believe failing which section 147 would give arbitrary powers to the AO to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. One must also keep in mind the conceptual difference between power to review and power to re-assess. The AO has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1.4.1989, the AO has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Considering, these facts and circumstances, we note that the re-assessment u/s 144 r.w.s. 147 dated 21.03.2016 was rightly quashed by the ld CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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