9911796707
TMI Blog2022 (7) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal for both the assessment years. Therefore, for the sake of brevity, grounds of appeal filed for the AY 2015-16, are re-produced as under: 1. The order of the Learned Commissioner of Income Tax (Appeals) is contrary to the law, facts and circumstances of the case. 2. For that the Learned Commissioner of Income Tax(Appeals) erred in confirming the Gross profit margin at a high rate calculated on the basis of subsequent year's figures. 3. For that the Learned Commissioner of Income Tax (Appeals) erred in estimating the general expenditures at low rate amounting to Rs.35,00,000/- without any basis. For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined gross profit of Rs.1,96,82,333/-. The AO further noted that the assessee has claimed various expenditure in the P & L A/c. However, could not produce necessary evidences and thus, rejected the books of accounts maintained by the assessee and estimated total expenditure of Rs.30 lakhs for whole year. Thus, after considering probable gross profit earned by the assessee of Rs.1,96,82,333/-, the AO has reduced Revenue expenditure of Rs.30 lakhs and determined the net profit for the year at 1,66,82,333/-, and assessed to tax. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has filed detailed Written Submissions on the issue, which has been reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, where the assessee has claimed various expenditure, which are necessary for running the business. Therefore, a reasonable estimate may be made towards gross profit and expenses. 6. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that incriminating material found during the course of search, suggest gross profit margin of Rs.11/- per KG and on said basis, the AO has extrapolated gross profit margin to whole year, because, the assessee could not file necessary evidences in support of financial statement filed for the relevant assessment year. The Ld.DR, further submitted that the assessee could not even file bills and vouchers in support of various expenses. Therefore, the AO as well as the Ld.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depending upon various factors including demand and supply and other geographical reasons like weather conditions, etc. The assessee further contended that it has maintained books of accounts and such books of accounts are audited by an Accountant and the AO has not noticed any discrepancy in the books of accounts. Therefore, rejection of books of accounts and estimation of gross profit that too on the basis of extrapolation of gross profit of part period to whole year is incorrect. 8. Having heard both sides and considered the relevant materials, we find force in the arguments of the assessee for the simple reason that there cannot be any uniformity in purchase and sale rate of chicks and birds. The rates of chicken varies and is highly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is only a solution. Hence, considering the facts and circumstances of the case, we are of the considered view that the profit margin estimated by the AO is higher side and thus, direct the AO to estimate gross profit of 8% on total sales declared by the assessee for both the assessment years. 10. Coming back to estimation of administrative expenses. The AO has rejected books of accounts and estimated administrative expenses for whole year at Rs.30 lakhs which includes, remuneration, salaries and wages, depreciation, etc. For the Financial Year relevant to the AY 2015- 16, the assessee has claimed total expenses of Rs.43,56,957/- and as against this, the Ld.CIT(A) has estimated total expenses of Rs.35 lakhs, which works out to 80% of tota ..... X X X X Extracts X X X X X X X X Extracts X X X X
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