GREEN INDIA SEEDS COMPANY,GANDHINAGAR vs. THE INCOME TAX OFFICER, WARD-2, GANDHINAGAR

आदेश / O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)– Gandhinagar, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)/GNR/105/2014-15 dated 20/08/2015 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961(hereinafter referred to as "the Act") dated 14/02/2014 relevant to Assessment Year (AY) 2011-12.

The assessee has raised the following ground of appeal: The learned CIT(A) erred in law and on facts in confirming the addition of Rs.9,12,969/- made on estimate basis to net profit, which is requested to be deleted.

ITA No.3028/Ahd/2015 Green India Seeds Company vs. ITO Asst.Year – 2011-12 - 2 -

The only issue raised by the Assessee is that the Ld. CIT (A) erred in estimating the profit at the rate of .75% on the gross turnover of Rs.38,96,15,301/- only and thereby making an addition of Rs. 9,12,969.00

The aggrieved assessee preferred an appeal to the Ld.CIT (A) who has confirmed the rejection of books of accounts and the profit determined by the AO.

Being aggrieved by the order of the Ld. CIT (A), the assessee is in appeal before us.

ITA No.3028/Ahd/2015 Green India Seeds Company vs. ITO Asst.Year – 2011-12 - 3 - 4. On the other hand, the Ld. DR vehemently supported the order of the authorities below.

Now the issue arises for the year under consideration what should be the reasonable rate of profit in the event of the rejection of the books of accounts under the provisions of section 145(3) of the Act. It is a settled law that once the books of accounts have been rejected, the only option available to the Revenue is to estimate the profit of the assessee based on some scientific basis. As there is no change in the facts and circumstances in the year under consideration vis-a-vis to the facts and circumstances of the preceding assessment year except the amount of the turnover and the bad debts, therefore we are of the view that the guidance can be taken from such preceding AY.

However, we note that the assessee claimed no bad debt in the immediately preceding assessment year, whereas the assessee has

ITA No.3028/Ahd/2015 Green India Seeds Company vs. ITO Asst.Year – 2011-12 - 4 - claimed bad debt amounting to Rs. 9,92,776.00 in the year under consideration. In our considered view, such bad debts need to be considered while estimating the profit for the year under consideration. However, we note that the assessee has not furnished sufficient documentary evidence in support of such bad debts before the authorities below. But at the same time, we find that the assessee has claimed bad debts in its audited financial statements for the amount as discussed above. Thus, in the interest of justice and fair play, we are inclined to set aside the order to the file of the AO for estimating the profit before interest to the partners but after considering the amount of the bad debts claimed by the assessee and decide the issue of afresh as per the provisions of law. It is also important to note that the assessee shall furnish the necessary pieces of evidence in support of the bad debts claimed in the year under consideration. Hence, the ground of appeal of the assessee is allowed for statistical purposes.

Sd/- Sd/- (Ms. MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 31/05/2019

ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS

ITA No.3028/Ahd/2015 Green India Seeds Company vs. ITO Asst.Year – 2011-12

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-Gandhinagar �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date 29.5.2019 (word processed by Hon’ble AM in his computer by dragon) 2. Date on which the typed draft is placed before the Dictating Member .. 30.5.2019 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S … 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….31.5.19 7. Date on which the file goes to the Bench Clerk…………………31.5.19 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order……………