TMI Blog2022 (9) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... SINGH , JM And DR. A. L. SAINI , AM For the Appellant : Kishore R. Gheewala , C. A. For the Respondents : Vinod Kumar , Sr. DR ORDER Per Dr. A. L. Saini , Accountant Member Captioned appeal filed by the assessee pertaining to the assessment year 2012-13, is directed against the order passed by the Learned National Faceless Appeal Centre (NFAC)/Ld. CIT(A) dated 16.08.2021, which in turn arises out of a penalty order passed by the Assessing Officer ('AO' for short) u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide order dated 14.11.2018. 2. Grounds of appeal raised by the assessee are as follows: 1. The order dated 14/11/2018 imposing penalty u/s. 271(1)(c), s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arises here is to estimation of profit. This is true that there was fall in G.P. Rate during the year @ 4.26% as against 6.87% shown in immediate preceding year. Ld. AO has also referred to two other comparative cases where GP rate was much better @ 8.83% 8.19% in the case of M/s. Chinco Textiles M/s. Chinco Polysizers coupled with better yield ratio of 109.92% 107.25% respectively as against 104% shown by the assessee. Eventually, Ld. AO applied GP rate of 8% as against 4.26% shown by the assessee and made addition of Rs. 50,08,257/- in this regard. During appellate proceedings, Ld. AR of the assessee has been provided the copies of final accounts of comparable cases to defend his case. In this regard, Ld. AR of the assessee has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their chemical consumption. As per rule of conventional wisdom, more chemical consumption would result into more yield like adding water to milk. On basis of above discussion, I find enough persuasive force in the arguments of Ld. AR that both the comparable cases picked up by Ld. AO for making GP comparison we not ideal or perfect to draw any adverse conclusion against the assessee and AO should not straight way apply GP rate @ 8% on basis of these so-called comparable cases. Comparability of profit results depends on various factors such quality of Raw Material used, scale of production use of technology, market place share, turnover, capital employed etc. Ld. AR has demonstrated that on so many counts the so-called comparable cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t GP Ratio was in the limits of 4.5% to 5.6% except in A.Y. 2011-12 when GP Rate was 6.87%. This is an established proposition that department cannot force a businessman to earn profit year after year and that too on a consistent rate. At the same time, because the assessee has failed to maintain day to day stock register in relation to quality quantity, book results are not reliable to cannot be accepted as it is in view of these facts circumstances, I find it fair appropriate to sustain a lumpsum addition of Rs. 5,00,000/- on estimate basis to meet the both ends of justice. Hence, the addition is sustained to the extent of Rs. 5,00,000/- and assessee will get a relief of Rs. 45,08,257/- (Rs. 50,08,257 - Rs. 5,00,000). Ground of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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