M/S JASMINE COMPUTECH PRIVATE LIMITED,MUMBAI vs. DCIT-CIRCLE 4(3)(1), MUMBAI

KANT, AM ppeals by the assessee and th rder dated 18.09.2024 passe come-tax (Appeals) – National F ort ‘the Ld. CIT(A)’] for assessm ised by the assessee are reprodu ts and in the circumstances of the case a CIT(A)/ National Faceless AppealRs. 2, mating the profit at Rs 8,21,88,893/- by t of total turnover (out of which the tax h on profit of Rs. 4,32,488/- in the Income puted profit is of Rs. 8,17,56,405/-) The e said disallowance may please be delete ts and in the circumstances of the case a CIT(A)/ National Faceless Appeal Centre h e decision of the Ld.AO in disallowing on claim U/s 32 of the Act Rs.63,07,4
ays that the said disallowance may ts and in the circumstances of the case a IT(A) / National Faceless Appeal Centre h he decision of the Ld.AO in disall
/ - on account of unexplained Credit U/
ellant prays that the said disallowance m cts and circumstances of the case and A)/ National Faceless Appeal Centre ha he decision of the Ld.AO in initiatin u/s 271(1) (c) of the Income Tax Act, 1961
ne Computech Pvt. Ltd.
2
766 & 5917/MUM/2024
he Revenue are ed by the Ld.
Faceless Appeal ment year 2012- uced as under:
and in law,
Centre has treating the has already
Tax Return e appellant ed.
and in law, has erred in n account of 446/-. The please be and in law, has erred in lowing Rs.
s 68 of the may please law the Nil as erred in ng penalty
.

ised by the Revenue are reprodu n the facts and circumstances of the case d in restricting the estimation of profit against the 5% even though the assesse ve the purchase made during the y n.
n the facts and circumstances of the case d in restricting the estimation of profit against the 5% even though the busin asset light and high margin business.
facts of the case are that during ssessee company was engaged er software. The assessee filed r f Rs.44,87,566/-. The return of elected for scrutiny assessmen ncome-tax Act, 1961 (in short with. In the course of assessme er made inquiries from the pu f account of assessee , but in cted the book profit of the as Act and estimated the gross pro s.273,96,29,755/-, which was and after subtracting the g wn by the assessee, was made. Further, the As tion on the fixed asset i.e.
to Rs.63,07,446/- in absence of y field inspector . The Assessing ne Computech Pvt. Ltd.
3
766 & 5917/MUM/2024
uced as under:
e, Ld. CIT(A) t at 3% of ee was not year under e, Ld. CIT(A) t at 3% of ness of the g the year under in the business return of income f income filed by t and statutory
‘the Act’) were ent proceedings, urchase parties view of adverse sessee invoking ofit at 5% of the worked out to gross profit at addition of ssessing Officer computer and f the verification g Officer further made addition of Rs.7
appearing in bank st of the Act. In this ma income of the assess
143(3) on 27.03.2015
gross profit rate fro additions on accou unexplained credit i
Revenue are in a reproduced above.
4. The ground No.
Nos. 1 and 2 of th therefore, all these gr
4.1 Brief facts qua
Officer observed sal gross profit of Rs.4, rate of 0.016%. Th inquiries in respect purchase and sale p
Officer on page 2 of issued notices u/s purchase/sales carri noticed that three p located on the sam
M/s Jasmin
ITA No. 57

7,14,90,183/- on account of un tatement/books of account, invo anner, the Assessing Officer as see at Rs.20,98,59,060/- in or 5. On further appeal, the Ld. CIT om 5% to 3% but sustained unt of disallowance of de in toto. Aggrieved, both the as appeal, raising the respectiv
1 of the appeal of the assessee he appeal of the Revenue are rounds are taken up together for the issue in dispute are that es turnover of Rs.273.96 cror
32,488/- only, which resulted herefore, the Assessing Offic of purchases and sales partie parties has been reproduced by f the assessment order. The A 133(6) of the Act for veri ied out by the assessee. The A purchase parties and three sal e address i.e. 801, Balarama, ne Computech Pvt. Ltd.
4
766 & 5917/MUM/2024
nexplained credit oking section 68
ssessed the total rder passed u/s T(A) reduced the the other two preciation and ssessee and the ve grounds as and the ground interconnected, r adjudication.
t the Assessing res but noticed in gross profit cer carried out es. A list of the y the Assessing ssessing Officer ification of the Assessing Officer les parties were , Bandra Kurla

Complex, Bandra E noticed that notices i in case of few partie notices issued. Ther u/s 131 of the Act requested to produc purchase vouchers, opportunities books
Assessing Officer. Th authorized represent software was licensed
He also enquired w customers and who p but in view of non-co production of the bo the book results of th
Act, estimated the p which was computed assessee filed certain
Income-tax Rules, subsequent assessm
133(6) in the subseq called for the reman taking into considera estimation of gross p
M/s Jasmin
ITA No. 57

East, Mumbai. The Assessing issued u/s 133(6) of the Act had es and the few parties did not reafter, the Assessing Officer i to the Director of the assesse ce books of accounts along w details of assets fixed etc. but of accounts were not produ he Assessing Officer thereafter fu tative of the assessee to expla d or pirated or stand alone or whether who provided ‘after s provided guarantee/warranty to ompliance on the part of the ass oks of accounts, the Assessing he assessee and invoking sectio profit at the rate of 5% of the d at Rs.13,69,81,487/-. On furt n additional evidences under R
1962 including the assessm ment years and reply of the not quent assessment year 2013-14
nd report from the Assessing O ation rejoinder of the assessee, profit rate to 3% as against 5% e ne Computech Pvt. Ltd.
5
766 & 5917/MUM/2024
Officer further d been returned t comply to the issued summon e company and with sales and despite various uced before the urther asked the ain whether the online software.
ale’ services to o the customers sessee and non-
Officer rejected on 143(3) of the e total turnover, ther appeal, the Rule 46A of the ment order for tices issued u/s . The Ld. CIT(A)
Officer and after he reduced the estimated by the Assessing Officer. T reproduced as under “I have perus submission of reply of the a available on r
On perusal of respect of es income. On p during appell engaged in bu
& IT enabled assessee has appellant is trading. The a books of acco
The AO, ha observation th kurla complex out of total 5
from whom p having the s appellant viz during the as that each A.
subsequent y in the A. Y un appellant did sales remaine the case that a small resid and that th computers wo place. Howev the profit. I am be reasonable
Accordingly th reduce the a partly allowed
4.2 We have carefu by the parties and ha
M/s Jasmin
ITA No. 57

The relevant finding of the :
sed facts of the case, assessment orde of the appellant, the remand report of th appellant on the remand report and the record.
f the record, it is seen that the addition stimated profit of Rs. 13,65,48,999/- perusal of the submissions and the doc late proceedings, it is observed that the usiness of trading in software, informatio d services. During the year under consi s done mainly software trading. The c that profit margin is very low in the appellant has not been able to explain a ount were not produced before the AO, for as in the assessment order given a hat on one specific address ie. 801 Balar x Bandra east, Mumbai is common for the 5 parties to whom sale is made and thre purchase is made also happen to be sa same address. As regards the submis z-a-viz the notices u/s 133(6) having ssessment proceedings in A.Y 2013-14, it Y is independent A. Y and service of th year does not change and effect the concl nder consideration. From the above, it is c not produce the books of account, the pu ed unverified and also the peculiar circ the appellant is stated to be doing the bu dential flat, which is occupied by the fa ere can not be any place left to a orth more than Rs 40 lakh and any emplo ver the AO's order is silent on the basis o m of the view that the estimation of profit e in view of the facts and circumstance he AO is directed to estimate the profits addition, accordingly. Thus the ground d.”
ully considered the rival submis ave meticulously examined the ne Computech Pvt. Ltd.
6
766 & 5917/MUM/2024
Ld. CIT(A) is er of the AO, he AO, cross e documents n made is in as business cuments filed appellant is on technology ideration the contention of business of as to why the r verification.
a categorical ram Bandra, e four parties ee parties to ame parties, ssion of the been served t is observed he notices in lusion drawn clear that the urchases and cumstance of usiness from amily as well accommodate oyees in that of estimating at 3% would of the case.
s at 3% and of appeal is ssions advanced material placed on record. The asses been carried out c
Assessing Officer ha
Act, which were duly parties. It is further business operations,
Officer in the assess year under consider
Departmental Repre purchase transaction have been verified.
engaged in accommo therefore, the entire careful consideration disallowed the entire of accounts and estim
Furthermore, the as Section 145(3) of the rate of 3% as sustai
Tax (Appeals) [CIT(A reduction of the gr considered view that based on sound reas or similar business.
respective estimation
M/s Jasmin
ITA No. 57

ssee contends that the trading consistently, and in subsequ ad issued notices under Sectio served upon and complied with submitted that, in view of the the gross profit rate applied b ment year 2013-14 ought to be ration as well. On the contra esentative (DR) has argued th ns nor the sales transactions
It has been contended that t dation entries with the intent to purchase amount should be d n, we find that the Assessing e purchases but has instead rej mated the gross profit from the ssessee has not contested th e Act but has only challenged ined by the Learned Commissi
A)], while the Revenue is ag ross profit rate from 5% to the estimation of the gross pro soning and comparable cases w
The authorities below have a ns without citing any comparab ne Computech Pvt. Ltd.
7
766 & 5917/MUM/2024
of software has uent years, the n 133(6) of the h by the relevant e consistency in by the Assessing e applied to the ary, the learned hat neither the of the assessee the assessee is o evade tax, and isallowed. Upon Officer has not ected the books trading activity.
e invocation of the gross profit ioner of Income ggrieved by the 3%. It is our ofit rate must be within the same arrived at their ble instances to justify their determin such a basis, it is im
Assessing Officer for profit rate. The Ass comparable cases of relevant assessment
Assessing Officer ma by the assessee in p ensure a just and eq stands remitted to reconsideration in th
Accordingly, the grou ground Nos. 1 and 2
statistical purposes.
5. In ground No. 2
account of deprecia
Upon due considera that the Learned verification conducte assets of the assesse
Assessing Officer has of the assessee's bu residential premises learned counsel for th
M/s Jasmin
ITA No. 57

nation of the gross profit rate. In mperative that the matter be re r the limited purpose of reasse sessing Officer shall take into entities engaged in software tra year. Additionally, if deemed ay also examine the gross profi preceding and succeeding asses quitable determination. Accordin o the file of the Assessin he light of the observations ma und No. 1 of the appeal of th
2 of the appeal of the Revenue
2 of the appeal of the assessee tion of Rs.63,07,446/- has be ation of the material on record
Assessing Officer has noted d by the Inspector of the Depar ee could not be duly verified. Fu s expressed skepticism regardin usiness operations being cond s under normal circumstanc he assessee has submitted that ne Computech Pvt. Ltd.
8
766 & 5917/MUM/2024
n the absence of emanded to the essing the gross o consideration ading during the necessary, the t rates declared ssment years to ngly, the matter ng
Officer for ade hereinabove.
he assessee and are allowed for disallowance on een challenged.
d, it is observed d that during rtment, the fixed urthermore, the ng the feasibility ducted from his ces. Before us, t the assessee is willing to furnish all the existence of fixed reports, and records submission, it has be file of the Assessing the facts and circum justice, we deem it ap
Officer for reconside fresh adjudication a produce documentar installation of the fix shall verify such evid afresh on merits. The accordingly allowed f
6. In ground No.
Rs.7,14,90,183/- on examination of the Learned Assessing O payables amounting amounting to ₹73
verification, determin
14.11.2011 at ₹7,14
balance of the accou business. Consequen
M/s Jasmin
ITA No. 57

l relevant documentary evidenc d assets, including bills, vouch s of electricity consumption. I een prayed that the matter be r
Officer for fresh verification. H mstances of the case, and in ppropriate to remit the matter t eration. The Assessing Officer s after affording the assessee an ry evidence substantiating the xed assets in question. The A dence in accordance with law an e ground No. 2 of the appeal of for statistical purpose.
3, the assessee has challeng account of unexplained credit.
material on record, it is obs
Officer has taken note of the a g to ₹78,72,61,334/- and tra
,74,24,069/-. The Assessing ned the maximum outstanding
,90,183/-, which was consider unt and the fund requirement ntly, the Assessing Officer tre ne Computech Pvt. Ltd.
9
766 & 5917/MUM/2024
ce in support of hers, installation
In light of this remanded to the Having regard to the interest of to the Assessing shall conduct a n opportunity to e existence and ssessing Officer nd pass an order f the assessee is ged addition of Upon a careful served that the assessee’s trade ade receivables
Officer, after g balance as on red as the peak for running the eated the peak balance outstanding assessee’s fund requ unexplained cash cr
The Learned CIT(A) a counsel for the asses to furnish all necess credit balance. Accor be granted for su circumstances of the appropriate to remit fresh adjudication.
matter after affordi relevant documenta
Assessing Officer sha and render a fresh d
No. 3 of the appeal purposes.
6. In the result,
Revenue are allowed
Order pronoun (KAVITHA RA
JUDICIAL M
Mumbai;
M/s Jasmin
ITA No. 57

in the bank account at ₹7,40,9
uirement and further classifie redit under the relevant provisi also upheld this finding. Before ssee has submitted that the ass sary documentary evidence to j rdingly, it has been prayed that ch verification. Considering case, and in the interest of jus this issue to the file of the Asse
The Assessing Officer shall ng the assessee an opportun ary evidence in support of all verify such evidence in accor decision on the merits of the ca of the assessee is also allowe both the appeals of the ass for statistical purposes.
ced in the open Court on 14/0
/-
S
AJAGOPAL)
(OM PRAK
MEMBER
ACCOUNTA ne Computech Pvt. Ltd.
10
766 & 5917/MUM/2024
97,183/- as the ed the same as ions of the Act.
us, the learned sessee is willing justify the peak t an opportunity the facts and stice, we deem it essing Officer for reconsider the nity to submit its claim. The rdance with law ase. The ground ed for statistical sessee and the 02/2025. KASH KANT)
ANT MEMBER

Dated: 14/02/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

M/s Jasmin
ITA No. 57

ded to :

BY ORDER

(Assistant Re

ITAT, Mu ne Computech Pvt. Ltd.
11
766 & 5917/MUM/2024
R, gistrar) umbai