BHAWAR SINGH RATHORE,UDAIPUR vs. DCIT, JAIPUR

During the course of hearing, the ld. AR submitted that the assessee was engaged in the business of securities services by the name of M/s Salasar Balaji Security Services and has disclosed gross receipt of Rs. 3,34,57,748/- disclosing the net profit rate of 4.05%. During the course of assessment proceedings, the assessee moved an application for transfer of the case from Jaipur to Udaipur due to the reason that the assessee and his business has shifted to Gogunda Udaipur. However, the AO has not transferred the case and passed the assessment order u/s 144 by holding that the assessee has not produced the books of accounts and not furnished the supporting bill/vouchers and applied the NP rate of 8% on the declared gross receipts and made trading addition of Rs. 13,21,197/-. On appeal, the ld. CIT(A) though has reduced NP rate to 4.75%, though the same has resulted in sustenance of addition of Rs. 2,33,820/-. Against the said findings, the assessee is now in appeal before us.

It was submitted by the ld AR that the assessee is maintaining its books of accounts which are duly audited. It was further submitted that the Assessing Officer has made trading addition without rejecting the books of accounts and it is a settled legal proposition that in absence of rejection of books of accounts, trading addition cannot be made in the hands of the assessee. It was further submitted that no basis has been provided by the Assessing Officer for estimating the NP rate of 8% and 3 ITA 637/JP/2015_ Sh. Bhanwar Singh Rathore, Udaipur vs. The DCIT, Jaipur, Now ITO, Udaipur even the ld. CIT(A) has not specified any basis for applying the NP rate of 4.75%.

Per contra, the ld. DR submitted that the assessment has been made in the present case u/s 144 and therefore, where the assessee has not produced the books of accounts, the Assessing Officer was left with no option but to complete the assessment basis the material available on record. It was further submitted that the ld. CIT(A) has already reduced the NP rate of 8% to 4.75% and against which the Revenue has also moved an appeal which has apparently been dismissed on account of low tax effect. It was accordingly submitted that no further relief should be granted to the assessee.

We have heard the rival contentions and perused the material available on record. As we have noted above, the ld AR has claimed that the assessee has duly maintained its books of accounts, however, the same couldn’t be produced before the Assessing officer due to shift of its operations from Jaipur to Udaipur. It was further submitted that books of accounts have not been rejected and in absence of rejection of books of accounts, no addition can be made. The case of the Revenue is that where the books of accounts were not produced at first place and the assessment has been completed u/s 144, there is no basis for the contention so advanced by the ld AR and estimation of net profit so sustained by the ld CIT(A) is justified. Given that the books of accounts have been claimed to be maintained and the same can be produced for verification and further, the fact that no basis has been given by the Assessing officer for estimating net profit @ 8% and even 4.75% as so determined by the ld CIT(A) has been challenged by the assessee, we deem it appropriate to set-aside the matter to the file of the Assessing officer for the limited purposes of examination and verification of books