9911796707
TMI Blog2024 (6) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... sed u/s. 144 of the Income Tax Act, 1961 ["the Act"] for the AY 2017-18. 2. Briefly stated the facts of the case are that the assessee Mohana Krishna Agencies is a Firm engaged in the business of distribution of Hindustan Leaver Company etc. During the assessment proceedings, it was observed by the Ld. AO that as per the information in ITD software, the assessee has made substantial cash deposits during the demonetization period ie., from 9/11/2016 to 31/12/2016 in the assessee's bank account with Corporation Bank, Narasannapeta Branch. Thereafter, the assessee's case was selected for scrutiny to verify the cash deposits during the demonetization period. The Ld. AO also observed that the assessee has not filed its return of income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order u/s. 144 of the Act on 26/12/2019. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC. 3. On appeal, the Ld. CIT(A)-NFAC, even though the assessee has been given multiple opportunities to substantiate its case, considering no response from the assessee's side, after discussing the issues at length based on the material available on record, partly allowed the appeal of the assessee. While granting relief, the Ld. CIT(A)-NFAC observed that since the assessee itself disclosed Gross Profit @ 4.6% and 4.7% in AY 2015-16 and 2016-17 respectively, in the absence of any documentary evidence to justify its actual profits for the AY under consideration, it would be deemed fit to estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- during the FY 2016-17. However, the Ld. CIT(A)-NFAC also erred in appreciating the submissions made by the assessee and granted a meagre relief to the assessee by directing the Ld.AO to restrict the gross profit @ 6% of the turnover against @8% made by the Ld. AO. The Ld. AR also further submitted that the companies would give GP margin @ 3.5% to 4.25% only and that will not exceed 4.25% of gross profit. Whereas the Ld. AO estimated @8% of the gross sales and the Ld. CIT(A)-NFAC estimated it @ 6%. The Ld. AR further submitted that even the Ld. Revenue Authorities have not given any comparable cases while adopting 8% and 6% gross profit by the Ld. AO and Ld. CIT(A)-NFAC respectively, which is arbitrary decision in its nature. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal cash credits during the AY under consideration. On appeal, before the Ld. CIT(A)-NFAC, the assessee has not properly utilized the opportunities provided to them. The assessee contended before the Ld. CIT(A)-NFAC vide its submissions that the entire credits appearing in the bank are not the turnover of the assessee-firm whereas the Ld. AO considered the entire credits as sales and therefore there is a variation of Rs. 63,27,044/-. However, the assessee has not produced any substantial documentary evidence to explain the variation of Rs. 63,27,044/- before the Ld. CIT(A)-NFAC. Further, the assessee has not even given an explanation or documentary evidence to justify its claim that the Gross Profit margin should be between 3.5% to 4.25% e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the assessee to prove its claim with cogent documentary evidence, which the assessee failed to do so even before us. Further, in the absence of any documentary evidence to prove the variation of Rs. 63,27,044/-, as contended by the assessee, and also in the absence of any books of account and bills & vouchers etc., for verification to substantiate the cash deposits, taking into account the earlier years disclosure of gross profit by the assessee, the Ld. AO estimated the income of the assessee @8% and on appeal the Ld. CIT(A)-NFAC has granted considerable relief to the assessee by directing the Ld. AO to estimate the GP @ 6%. Therefore, we have no hesitation to come to a conclusion that there is no infirmity in the order of 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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