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TMI Blog2025 (5) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... is 2018-19. 2. The grounds raised read as follows:- 1.1 The order of the CIT (A) is bad in law and is liable to be set aside in so far as it Confirms the addition to the extent of Rs.9,87,686/-, 8% of the turnover. 1.2 The CIT(A) erred by only partially allowing the appeal, reducing the gross profit rate by merely half percent from 8.5% to 8.0%; while dismissing the other grounds without adequately considering the Appellant's submissions in their proper context. 2. The CIT(A) Ought to have seen that the AO did not consider the submissions of the Appellant, and that the assessment order was a nonspeaking order, except for addressing the discrepancy in purchases related to M/s. Heera Moti Textiles (India). 3. The CIT(A) failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his accounts other than current accounts. In response to the notice issued u/s.148A(b) of the Act, the assessee filed his response on 22.03.2022. The assessee stated that cash deposits and withdrawals are out of his business and he has already filed his return of income on 03.10.2019 (manually). Therefore, it was submitted that notice u/s.148 of the Act need not be issued. The AO however rejected the explanation of the assessee and held that assessee had not filed his return of income for the relevant assessment year and therefore, the aforesaid amount was considered as escaped income. The AO proceeded to pass an order u/s.148A(d) of the Act on 31.03.2022 and notice u/s.148 of the Act was issued on 31.03.2022. 3.2 In response to the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .144B of the Act on 10.03.2023. In the said assessment order, the AO made an addition of Rs.17,12,715/- being the difference of GP estimation. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the First Appellate Authority. Before the First Appellate Authority, the assessee raised contentions with regard to the reopening of assessment as invalid and also on merits. The CIT(A) partly-allowed the appeal of the assessee by reducing the GP rate to 8% instead of 8.5% made by the AO. The relevant finding the CIT(A) reads as under:- "5.3.3 I have carefully perused the assessment order and submission of the appellant. It is observed that the AO has rejected the books of accounts by invoking provisions of section 145(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Here it is important to note that the appellant has failed to substantiate the correctness and completeness of the accounts maintained by him before the AO as well as during appeal proceedings. Since the action of the AO of rejection of books of account of the appellant for the year under consideration has been held as correct in above para, therefore, the estimation of gross profit by the AO is also held as correct. 5.3.5 The question that remains now is that what should be the estimated profit in the present case. The relevant extract of section 44AD of the Act is reproduced hereunder: ". ... (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal before the Tribunal. The assessee has filed three sets of paper-book. In the first set of paper-book comprising of 90 pages, the assessee had enclosed submissions made before the AO & CIT(A), notices issued during the course of proceedings before the AO, the manual filing of the audit report, return of income, the death certificate of the assessee's auditor, etc. In the second set of paperbook, the assessee had enclosed the case laws relied on and in the third set, the assessee had enclosed the turnover for the past five years, the GP ratio and the net profit rate. 5.1 The Ld.AR submitted even in a case of rejection of books of accounts, estimation of income should be based on material on record and cannot arbitrary. It was stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) NP Ratio 1. 2018-19 Rs.14,50,06,020/- Rs.1,06,12,796/- 7.32% Rs.12,46,332/- 0.86% 2. 2017-18 Rs.15,72,47,857/- Rs.92,50,867/- 5.88% Rs.1,46,502/- 0.26% 3. 2016-17 Rs.15,46,58,754/- Rs.79,53,297/- 5.14% Rs.8.08,447/- 0.52% 4. 2015-16 Rs.15,64,03,004/- Rs.77,65,340/- 4.96% Rs.9,80,796/- 0.63% 5 2014-15 Rs.15,03,49,798/- Rs.78,36,130/- 5.21% Rs.11,03,131/- 0.73% Average 5.48% 0.6% 7.2 The Jodhpur Bench of the Tribunal in the case of ITO vs. Hitesh Kumar Panchori in ITA No.461/Jodh/2006 had held that even while rejecting the books of accounts of the assessee, the AO has to adopt the GP rate that has been disclosed in the assessee's line of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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