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TMI Blog2025 (1) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... icer [hereinafter referred to as "AO"] under Section 144 r.w.s. 145(2) of the Income Tax Act, 1961 [hereinafter referred to as "the Act"] by estimating the profit at 0.1% of the gross turnover after rejecting the books of accounts. Facts of the Case 2. The assessee is an individual carrying on a wholesale trading business of rice and paddy in the name of Prism Agri Tradelink. The return of income was filed on 14/10/2013 declaring a total income of Rs. 3,23,500/-. The case was selected for scrutiny under CASS due to the declaration of very low net profit compared to the high gross turnover. A show-cause notice dated 01/03/2016 was issued by the AO, but no response was received from the assessee. Hence, the AO proceeded ex-parte and rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of CIT(A) the assessee filed an appeal before us with following grounds of appeal: 1. Both the Id. A.O. and Ld CIT(A) has erred in law in rejecting book results under section 145(2) of the IT Act, 1961 despite the fact that no adverse findings were brought out by the A.O. during remand proceedings. 2. Both, the Ld. AO has erred in estimating the income of the assessee @ 0.5% on the gross turnover and the Ld. CIT(A) further erred in estimating the income of the assessee @ 0.1% overlooking the facts mentioned in the remand report of the A.O. wherein trading activities of the appellant was thoroughly verified during remand proceedings and therefore there is no scope of attracting provisions of section 145(2) of the I.T. Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court, through its judgment in Miscellaneous Application No. 21 of 2022 in Suo Motu Writ Petition (C) No. 3 of 2020, extended the period of limitation for filing appeals due to the unprecedented disruptions caused by the pandemic. The period from 15 March 2020 to 28 February 2022 has been specifically excluded while calculating the limitation period. Therefore, in the present case, nearly one third of the delay falls within the COVID-19 period, which warrants a liberal approach in condoning the delay. 4.2. The Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (167 ITR 471) held that the expression "sufficient cause" must be interpreted liberally to ensure that justice is not denied due to procedural delays. Add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A)'s Findings. 7.1. The AR stated that the AO, after thorough verification during the remand proceedings, found the following records to be complete and accurate: * Sales register and purchase register * Original invoices and bills * Bank statements * Stock details and evidence of expenses 7.2. The AR further stated that four parties were summoned by the AO for verification of transactions, and all appeared before the AO with original photo ID and confirmations, proving the genuineness of the transactions. 7.3. The AR also argued that the CIT(A) acknowledged that the missing details had been provided during remand proceedings and verified by the AO but still upheld the rejection of the books without valid reasons. The CIT(A)'s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorized Representative (AR), and the copy of the FIR filed by Bank of Baroda against Shri Jalaram Rice Industries Pvt. Ltd. and its directors. We find that the AO rejected the books of accounts under Section 145(3), citing that they were incomplete and lacked supporting details, leading to an estimation of income at 0.5% of turnover. The CIT(A), while upholding the rejection, reduced the estimation to 0.1% of turnover based on judicial precedents. However, during remand proceedings, the AO verified the sales register, purchase register, original bills/invoices, bank statements, quantitative details of stock, and supporting evidence of expenses. The remand report categorically noted that all books and documents were duly produced and veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. (355 ITR 290), which held that only the profit element in a bogus transaction can be taxed. However, the CIT(A) failed to demonstrate how the transactions recorded in the assessee's books were bogus, especially in light of the AO's verification report that found no discrepancies. 9.2. The DR argued that the transactions were fictitious based on the findings of the lower authorities. However, we find that there is no substantive evidence to support this claim. The AO's own verification contradicts the initial assumption of fictitious transactions. The AR demonstrated that all purchases and sales were accounted for and supported by valid documents, which the AO found to be correct. Further, the recent decision of the Co-ordinate Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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