SMT. KAVITA GUPTA,JAIPUR vs. INCOME TAX OFFICER, WARD-6-1, JAIPUR

The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. In this appeal, the assessee is aggrieved for upholding trading addition by estimating Net Profit (NP) at 4% by the ld. CIT(A).

2 ITA 444/JP/2019_ Smt. Kavita Gupta Vs ITO 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee individual is a wholesaler of Edible Oil and Vanaspati Ghee. For the year under consideration the assessee filed her return of income on 29.11.2014 declaring total income of Rs. 3,96,420/-. The case of the assessee was selected for scrutiny and the assessment u/s 143(3) r.w.s. 144 of the Act was competed vide order dated 22.11.2016 wherein total income of Rs. 65,74,110/- was assessed. The assessee for the year under consideration declared gross profit of Rs. 10,38,822/- i.e. GP Rate of 0.79% and Net Profit of Rs. 3,96,417 i.e. NP Rate of 0.30% against a turnover of Rs. 13,14,82,105/-. The A.O. made addition after rejecting books of account U/s 145(3) of the Act and estimating N.P. @ 5%. By the impugned order, the ld. CIT(A) has given partial relief and restricted addition by estimating N.P. @ 4%, assessee is in further appeal before us.

We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the assessee is engaged in wholesale business of edible oil and vanaspati ghee. During the course of scrutiny assessment, the A.O. rejected books of account after observing that the N.P. rate declared

We also found that the assessee declared better results, in the opinion of AO the assessee declared very low Net Profit. Therefore, after rejecting the books of account, the AO estimated NP at the rate of 5% and, accordingly, made addition of Rs. 61,77,688/-. The AO was satisfied with the declared Gross Profit and was only dissatisfied with declared Net Profit as the assessee, in the opinion of the AO, could not file details of expenses debited in P&L Account. The total expenses which were debited in P&L account were of Rs. 6,63,254 and being

Now there remains question of furnishing details of expenses. However, we found that the details of expenses were furnished but not complete. Keeping in view the nature of expenses debited and considering its reasonableness, we direct the A.O. to restrict the addition to the extent of 5% of the expenditure so claimed by the assessee. Accordingly, we modify the orders of the authorities below and restrict the addition to the extent of 5% of expenditure of Rs.

In the result, appeal of the assessee is allowed in part.