TMI Blog2023 (9) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... se. For estimating the profit without rejecting the books the jurisdictional high court in the case of CIT Vs. Maharaja Shree Umaid Mills Ltd. [ 1991 (5) TMI 46 - RAJASTHAN HIGH COURT] as held that question about the fall in gross profit rate cannot be looked into in this case because the Inspecting Assistant Commissioner has not rejected the books of accounts of the assessee and without making this as a base, it could not be said that the expenditure had been inflated, which is a question of fact and in view of the finding of the Commissioner which is confirmed by the tribunal, the same cannot be allowed. Assessee appeal allowed. - SHRI SANDEEP GOSAIN, JM SHRI RATHOD KAMLESH JAYANTBHAI, AM For the Appellant : Sh. Mahendra Gargieya (Adv.) and Sh. Devang Gargieya (Adv.) For the Respondent : Smt Monisha Choudhary (Addl. CIT) ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 26/08/2022 [here in after (NFAC)/ ld. CIT(A)] for assessment year 2018-19 which in turn arise from the order dated 23.03.2021 passed under section 143(3) r.w.s 143(3A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immediately got the paper signed and sent it to the counsel at Jaipur and accordingly the appeal was filed . But this resulted into a minor delay of 2 days. 2.2. That pertinently, the filing fees of Rs. 500/- was already deposited long back on 19.01.2023 that is a month before the due date .Thus, the assessee was quite serious to file the appeal. 3. That in support of the aforesaid facts, affidavit of the of assessee is enclosed with this application and marked as Annexure A 4. That the applicant is a layman not very conversant with the complex tax laws and because of the circumstances stated above, the delay so caused was beyond her control but was bonafide and unintended. The assessee was not going to gain any benefit because of the delayed finding and her conduct was not contumacious. 5. Supporting Case Laws: It is submitted that the Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach while considering a case for condonation of delay. The following observations of the Hon'ble Court are notable: The legislature has conferred the power to condone de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Some details were uploaded in compliance to the notice and another clarification letter also issued on 19.01.2021. All the required details/documents were submitted by the assessee through electronic platform. The same have been verified in detail. The firm is dealing with Kaccha Adatiya in agricultural commodities, sales of farmer s products in adat (commission) and sales on commission basis on behalf of farmers and food grain trading. The difference between GSTR and ITR, all clarification put forth in the questionnaire have been explained properly. But on going through the profit margin as mentioned in the annexure G to form no. 3CD an abnormal reduction in percentage of GP and net profit is observed. The ld. AO noted that such a huge reduction cannot happen that too between two consecutive years. But the assessee did not give any explanation for the reduction in net profit. So a reasonable percentage of net profit is to be adopted for assessing the income. Hence, the net profit is computed at 4% of the turnover (1,17,96,559/-) i.e., 4,71,862/- as income of the assessee. 4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there can be variation in rate and even loss due to long pending stock, transit etc., the Department can be bit lenient while assessing the income. Anyway, such a huge reduction cannot happen that too between two consecutive years. But the assessee did not give any explanation for the reduction in net profit. So a reasonable percentage of net profit is to be adopted for assessing the income. Hence, the net profit is computed at 4 % of the turnover (1,17,96,559/-) i.e., Rs. 4,71,862/-. In the first appeal, the ld. CIT(A) vide its order dated 26.08.2022 u/s 250, also confirmed the addition vide para 5 very summarily by mainly relying upon AO s finding only but there is no independent application of mind by him on the submissions, holding as under: I have carefully considered the facts of the case. As per the findings of the AO in the case, it is noticed that as contended by the appellant disallowance of Business expenses and Sales receipts of Rs. 2,65,708/- was disallowed by the Assessing Officer for the assessment year 2018-19. The Assessing Officer, on careful consideration of the submission did not find the same acceptable. After intensive study of the case, the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in holding that since the books of account had not been rejected the mere fact that there had been a fall in the gross profit rate would not lead to the inference that the expenditure had been inflated. No question of law arose form the order of the Tribunal. 3. DCIT v. Mewar Textile Mills Ltd. 21 Tax World 821 (JP) (DPB 6-10) The AO has nowhere invoked the provisions of section 145(1) and if the provisions are not invoked then the estimate of profit is not possible in the eyes of law. No defect of any kind was pointed out by the AO 4. Mohd. Umer v. CIT 101 ITR 525 (Pat) (Page 528) (DPB11-14) No finding was recorded by the departmental authorities as to the unacceptability of the method and irregularity of the account kept by the assessee. It is well settled that in the absence of such a finding recorded by the authorities, the book results cannot be ignored or brushed aside. In the absence of any such finding, there being no reason germane to the unacceptability of the book results..... 5. Ajanta Constructions (P.) Ltd. Vs. ACIT XXII TW 606 (ITAT Jaipur) The maintenance of books of accounts in the normal course of business activities have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. For verification you may check enclosed mustard a/c in which purchases are made in March only and no sales in March 2018. Assessee has purchased goods for stock only. Market rate of mustard during the year not increased as compare to last year and as a result GP rate during the year is decrease which is not control in the assessee because market rate on agriculture commodities increases and decreases on supply and demand basis or govt. policy of stock. Copy of purchase and sale account of mustard seed are enclosed for A/s year 2017-18 and 2018-19. 4. As regards son of a/c there was opening stock as on 01-04-2017 11328 Kg. by Rs. 8,09,027/- Rs. 7141 per Kg. and purchases was made whole year @ Rs.61.22 per Kg and sale was made by Rs. 61.46 per Kg. hence loss was due to decreases in market price as compare to last year. For verification son of purchase sale a/c is being enclosed. Detail of purchase sale of FY 2016-17 is also enclosed for verification of opening stock. Learned AO did not find any fault in the explanation so submitted. He now ever even rebutted /controverted the submissions made and the facts narrated therein by bringing any contrary evidence thereto. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detailed explanation for the difference in GP by submission dated 20.04.2022 and 08.08.2022 the same is neither discussed by the ld. AO nor by the ld. CIT(A) while dealing with the facts of the case. The books of accounts of the assessee is duly audited by an independent chartered accountant. The assessee in detailed explained the reason behind the fall in the profit rate. Even the quantitative details of the opening stock, purchases, sales and closing stock were given and the same is not disputed by the lower authorities. In spite of all these details placed on record and without finding fault on the record the action of the AO estimating the profit rate @ 4% and that too without rejecting the books of account is not in accordance with the law. Even the ld. CIT(A) has not given any finding on the merits of the case. For estimating the profit without rejecting the books the jurisdictional high court in the case of CIT Vs. Maharaja Shree Umaid Mills Ltd. [192 ITR 565] has held that The other question about the fall in gross profit rate cannot be looked into in this case because the Inspecting Assistant Commissioner has not rejected the books of accounts of the assessee and witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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