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Facts
The assessee, engaged in software trading, filed a return declaring a loss. The Assessing Officer (AO) rejected the book results, invoked Section 145(3), and estimated profit at 5% of turnover. Additions were made for disallowance of depreciation and unexplained credit. The CIT(A) reduced the profit estimation to 3% but sustained other additions. Both assessee and revenue are in appeal.
Held
The Tribunal held that the estimation of gross profit rate should be based on sound reasoning and comparable cases. The matter was remanded to the AO to reassess the gross profit rate, considering comparable cases and prior/subsequent assessment years. Additions for depreciation and unexplained credit were also remanded for fresh adjudication.
Key Issues
Whether the estimation of gross profit rate was justified and whether the disallowances for depreciation and unexplained credit were correctly made.
Sections Cited
145(3), 32, 68, 271(1)(c), 133(6), 131, 143(3)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
These cross appeals by the assessee and the Revenue are These cross appeals by the assessee and the Revenue are These cross appeals by the assessee and the Revenue are directed against order dated 18.09.2024 passed by the Ld. directed against order dated 18.09.2024 passed by the Ld. directed against order dated 18.09.2024 passed by the Ld. Commissioner of Income Commissioner of Income-tax (Appeals) – National Faceless Appeal National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012- Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012 Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012 13.
The grounds raised by the assessee are reproduced as under: grounds raised by the assessee are reproduced as under: grounds raised by the assessee are reproduced as under:
1. On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A)/ National Faceless AppealRs. 2, Centre has the Hon'ble CIT(A)/ National Faceless AppealRs. 2, Centre has the Hon'ble CIT(A)/ National Faceless AppealRs. 2, Centre has erred in estimating the profit at Rs 8,21,88,893/ erred in estimating the profit at Rs 8,21,88,893/- by treating the by treating the same as 3% of total turnover (out of which the tax has already as 3% of total turnover (out of which the tax has already as 3% of total turnover (out of which the tax has already been offered on profit of Rs. 4,32,488/ been offered on profit of Rs. 4,32,488/- in the Income Tax Return in the Income Tax Return and the disputed profit is of Rs. 8,17,56,405/ and the disputed profit is of Rs. 8,17,56,405/-) The appellant ) The appellant prays that the said disallowance may please be deleted. prays that the said disallowance may please be deleted. prays that the said disallowance may please be deleted.
2. On the facts and in the circumstances of the case and ts and in the circumstances of the case and in law, ts and in the circumstances of the case and the Hon' ble CIT(A)/ National Faceless Appeal Centre has erred in the Hon' ble CIT(A)/ National Faceless Appeal Centre has erred in the Hon' ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing on account of upholding the decision of the Ld.AO in disallowing on account of upholding the decision of the Ld.AO in disallowing on account of deprecation claim U/s 32 of the Act Rs.63,07,446/ deprecation claim U/s 32 of the Act Rs.63,07,446/ deprecation claim U/s 32 of the Act Rs.63,07,446/-. The appellant prays t appellant prays that the said disallowance may please be hat the said disallowance may please be deleted 3. On the facts and in the circumstances of the case and 3. On the facts and in the circumstances of the case and 3. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) / National Faceless Appeal Centre has erred in the Hon'ble CIT(A) / National Faceless Appeal Centre has erred in the Hon'ble CIT(A) / National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing Rs. upholding the decision of the Ld.AO in disallowing Rs. upholding the decision of the Ld.AO in disallowing Rs. 7,14,90,183 / 7,14,90,183 / - on account of unexplained Credit U/s 68 of the ount of unexplained Credit U/s 68 of the Act. The appellant prays that the said disallowance may please Act. The appellant prays that the said disallowance may please Act. The appellant prays that the said disallowance may please be deleted 4. On the facts and circumstances of the case and law the Nil 4. On the facts and circumstances of the case and law the Nil 4. On the facts and circumstances of the case and law the Nil Hon'ble CIT(A)/ National Faceless Appeal Centre has erred in Hon'ble CIT(A)/ National Faceless Appeal Centre has erred in Hon'ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the deci upholding the decision of the Ld.AO in initiating penalty initiating penalty proceedings u/s 271(1) (c) of the Income Tax Act, 1961. proceedings u/s 271(1) (c) of the Income Tax Act, 1961. proceedings u/s 271(1) (c) of the Income Tax Act, 1961.
M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 3 & 5917/MUM/2024 2.1 The grounds raised by the Revenue are reproduced as under: The grounds raised by the Revenue are reproduced as under: The grounds raised by the Revenue are reproduced as under:
Whether on the facts and circumstances of the case, Ld. CIT(A) 1. Whether on the facts and circumstances of the case, Ld. CIT(A) 1. Whether on the facts and circumstances of the case, Ld. CIT(A) was justified in restricting was justified in restricting the estimation of profit at 3% of the estimation of profit at 3% of turnover as against the 5% even though the assessee was not turnover as against the 5% even though the assessee was not turnover as against the 5% even though the assessee was not able to prove the purchase made during the year under able to prove the purchase made during the year under able to prove the purchase made during the year under consideration. consideration.
2. Whether on the facts and circumstances of the case, Ld. CIT(A) 2. Whether on the facts and circumstances of the case, Ld. CIT(A) 2. Whether on the facts and circumstances of the case, Ld. CIT(A) was justified in restrictin was justified in restricting the estimation of profit at 3% of g the estimation of profit at 3% of turnover as against the 5% even though the business of the turnover as against the 5% even though the business of the turnover as against the 5% even though the business of the assessee is asset light and high margin business. assessee is asset light and high margin business.
Briefly stated, facts of the case are that Briefly stated, facts of the case are that during the year under during the year under consideration, the assessee company was eng the assessee company was engaged in the business aged in the business of trading of computer software. The assessee filed return of income of trading of computer software. The assessee filed return of income of trading of computer software. The assessee filed return of income declaring total loss of Rs.44,87,566/ declaring total loss of Rs.44,87,566/-. The return of income filed by . The return of income filed by the assessee was selected for scrutiny assessment and statutory the assessee was selected for scrutiny assessment and statutory the assessee was selected for scrutiny assessment and statutory notices under the Income notices under the Income-tax Act, 1961 (in short ‘the Act’) were , 1961 (in short ‘the Act’) were issued and complied with. In the course of assessment proceedings, issued and complied with. In the course of assessment proceedings, issued and complied with. In the course of assessment proceedings, the Assessing Officer made inquiries from the purchase parties the Assessing Officer made inquiries from the purchase parties the Assessing Officer made inquiries from the purchase parties recorded in books of account of assessee books of account of assessee , but in view of adverse , but in view of adverse observation, he rejected th rejected the book profit of the assessee invoking e book profit of the assessee invoking section 145(3) of the Act and estimated the gross profit at 5% of the section 145(3) of the Act and estimated the gross profit at 5% of the section 145(3) of the Act and estimated the gross profit at 5% of the total turnover of Rs.273,96,29,755/ total turnover of Rs.273,96,29,755/-, which was worked out to which was worked out to Rs.13,69,81,487/- and after subtracting the gross profit at and after subtracting the gross profit at and after subtracting the gross profit at Rs.4,32,488/- shown shown by by the th assessee, addition of Rs.13,65,48,999/- was made. Further, the Assessing Officer was made. Further, the Assessing Officer was made. Further, the Assessing Officer disallowed depreciation on the fixed asset i.e. computer and disallowed depreciation on the fixed asset i.e. computer and disallowed depreciation on the fixed asset i.e. computer and software amounting to Rs.63,07,446/ software amounting to Rs.63,07,446/- in absence of the verification in absence of the verification of the fixed assets by field inspector by field inspector . The Assessing Officer further e Assessing Officer further
M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 4 & 5917/MUM/2024 made addition of Rs.7,14,90,183/ made addition of Rs.7,14,90,183/- on account of unexplaine on account of unexplained credit appearing in bank statement/books of account bank statement/books of account, invoking section 68 invoking section 68 of the Act. In this manner, the Assessing Officer assessed the total of the Act. In this manner, the Assessing Officer assessed the total of the Act. In this manner, the Assessing Officer assessed the total income of the assessee of the assessee at Rs.20,98,59,060/- in order passed u/s in order passed u/s 143(3) on 27.03.2015. On further appeal, the Ld. CIT(A) reduced the 143(3) on 27.03.2015. On further appeal, the Ld. CIT(A) reduced the 143(3) on 27.03.2015. On further appeal, the Ld. CIT(A) reduced the gross profit rate from 5% to 3% but sustained the other two gross profit rate from 5% to 3% but sustained the other two gross profit rate from 5% to 3% but sustained the other two additions on additions on account account of of disallowance of depreciation and depreciation and unexplained credit in in toto. Aggrieved, both the assessee and the eved, both the assessee and the Revenue are in appeal, raising the Revenue are in appeal, raising the respective respective grounds as reproduced above.
The ground No. 1 he ground No. 1 of the appeal of the assessee and t of the appeal of the assessee and the ground Nos. 1 and 2 of the appeal of the Revenue are . 1 and 2 of the appeal of the Revenue are interconnected, . 1 and 2 of the appeal of the Revenue are therefore, all these grounds are taken grounds are taken up together for adjudication. together for adjudication.
4.1 Brief facts qua the issue in dispute are that the Assessing Brief facts qua the issue in dispute are that the Assessing Brief facts qua the issue in dispute are that the Assessing Officer observed sales sales turnover of Rs.273.96 crores but noticed of Rs.273.96 crores but noticed gross profit of Rs.4,32,488/ gross profit of Rs.4,32,488/- only, which resulted in gross profit which resulted in gross profit rate of 0.016%. Therefore, the Assessing Officer carried out 6%. Therefore, the Assessing Officer carried out 6%. Therefore, the Assessing Officer carried out inquiries in respect of purchase inquiries in respect of purchases and sales parties. A list of the and sales parties. A list of the purchase and sale parties has been reproduced by the Assessing purchase and sale parties has been reproduced by the Assessing purchase and sale parties has been reproduced by the Assessing Officer on page 2 of the assessment order. The Assessing Officer Officer on page 2 of the assessment order. The Assessing Officer Officer on page 2 of the assessment order. The Assessing Officer issued notices u/s 133(6) of the Act for verification of the es u/s 133(6) of the Act for verification of the es u/s 133(6) of the Act for verification of the purchase/sales carried out by the assessee. The Assessing Officer purchase/sales carried out by the assessee. The Assessing Officer purchase/sales carried out by the assessee. The Assessing Officer noticed that three purchase parties and three sales parties were noticed that three purchase parties and three sales parties noticed that three purchase parties and three sales parties located on the same address i.e. 801, Balarama, Bandra Kurla located on the same address i.e. 801, Balarama, Bandra Kurla located on the same address i.e. 801, Balarama, Bandra Kurla
M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 5 & 5917/MUM/2024 Complex, Bandra East, Mumbai. The Assessing Officer East, Mumbai. The Assessing Officer East, Mumbai. The Assessing Officer further noticed that notices issued u/s 133(6) of the Act had been returned issued u/s 133(6) of the Act had been returned issued u/s 133(6) of the Act had been returned in case of few parties and the few parties did not comply to the in case of few parties and the few parties did not comply to the in case of few parties and the few parties did not comply to the notices issued. Thereafter, the Assessing Officer issued summon notices issued. Thereafter, the Assessing Officer issued summon notices issued. Thereafter, the Assessing Officer issued summon u/s 131 of the Act to the Director of the assessee company and u/s 131 of the Act to the Director of the assessee c u/s 131 of the Act to the Director of the assessee c requested to produce duce books of accounts along with sales and books of accounts along with sales and purchase vouchers, details of assets fixed etc. but despite various purchase vouchers, details of assets fixed etc. but despite various purchase vouchers, details of assets fixed etc. but despite various opportunities books of accounts were not produced before the opportunities books of accounts were not produced before the opportunities books of accounts were not produced before the Assessing Officer. The Assessing Officer thereafter further asked the Assessing Officer. The Assessing Officer thereafter further asked the Assessing Officer. The Assessing Officer thereafter further asked the authorized representative of the assessee to explain whether the presentative of the assessee to explain whether the presentative of the assessee to explain whether the software was licensed or pirated or stand alone or online software. software was licensed or pirated or stand alone or online software software was licensed or pirated or stand alone or online software He also enquired whether also enquired whether who provided ‘after sale’ services to who provided ‘after sale’ services to customers and who provided customers and who provided guarantee/warranty to the customers to the customers but in view of non-compliance compliance on the part of the assessee on the part of the assessee and non- production of the books of accounts, the Asse production of the books of accounts, the Assessing Officer rejected ssing Officer rejected the book results of the assessee and invoking of the assessee and invoking section 143(3) of the section 143(3) of the Act, estimated the profit estimated the profit at the rate of 5% of the total turnov 5% of the total turnover, which was computed at Rs.13,69,81,487/ which was computed at Rs.13,69,81,487/-. On further appeal, the . On further appeal, the assessee filed certain additional evidence assessee filed certain additional evidences under Rule 46A of the under Rule 46A of the Income-tax Rules, 1962 including the assessment order for tax Rules, 1962 including the assessment order for tax Rules, 1962 including the assessment order for subsequent assessment years and reply of the notices issued u/s subsequent assessment years and reply of the notices issued u/s subsequent assessment years and reply of the notices issued u/s 133(6) in the subsequent assessment year 2013 133(6) in the subsequent assessment year 2013-14. The Ld. CIT(A) 14. The Ld. CIT(A) called for the remand report from the Assessing Officer and after called for the remand report from the Assessing Officer and after called for the remand report from the Assessing Officer and after taking into consideration rejoinder of the assessee, he reduced the taking into consideration rejoinder of the assessee, taking into consideration rejoinder of the assessee, estimation of gross profit profit rate to 3% as against 5% estim 3% as against 5% estimated by the M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 6 & 5917/MUM/2024 ITA No. 5766 Assessing Officer. The relevant finding of the Ld. CIT(A) is Assessing Officer. The relevant finding of the Ld. CIT(A) is Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: reproduced as under:
“I have perused facts of the case, assessment order of the AO, I have perused facts of the case, assessment order of the AO, I have perused facts of the case, assessment order of the AO, submission of the appellant, the remand report of the AO, cross submission of the appellant, the remand report of the AO, cross submission of the appellant, the remand report of the AO, cross reply of the appellant on the reman reply of the appellant on the remand report and the documents d report and the documents available on record. available on record. On perusal of the record, it is seen that the addition made is in On perusal of the record, it is seen that the addition made is in On perusal of the record, it is seen that the addition made is in respect of estimated profit of Rs. 13,65,48,999/ respect of estimated profit of Rs. 13,65,48,999/- as business as business income. On perusal of the submissions and the documents filed On perusal of the submissions and the documents filed On perusal of the submissions and the documents filed during appellate during appellate proceedings, it is observed that the appellant is proceedings, it is observed that the appellant is engaged in business of trading in software, information technology engaged in business of trading in software, information technology engaged in business of trading in software, information technology & IT enabled services. During the year under consideration the & IT enabled services. During the year under consideration the & IT enabled services. During the year under consideration the assessee has done mainly software trading. The contention of assessee has done mainly software trading. The contention of assessee has done mainly software trading. The contention of appellant is th appellant is that profit margin is very low in the business of at profit margin is very low in the business of trading. The appellant has not been able to explain as to why the trading. The appellant has not been able to explain as to why the trading. The appellant has not been able to explain as to why the books of account were not produced before the AO, for verification. books of account were not produced before the AO, for verification. books of account were not produced before the AO, for verification. The AO, has in the assessment order given a categorical The AO, has in the assessment order given a categorical The AO, has in the assessment order given a categorical observation that o observation that on one specific address ie. 801 Balaram Bandra, n one specific address ie. 801 Balaram Bandra, kurla complex Bandra east, Mumbai is common for the four parties kurla complex Bandra east, Mumbai is common for the four parties kurla complex Bandra east, Mumbai is common for the four parties out of total 5 parties to whom sale is made and three parties to out of total 5 parties to whom sale is made and three parties to out of total 5 parties to whom sale is made and three parties to from whom purchase is made also happen to be same parties, from whom purchase is made also happen to be same parties, from whom purchase is made also happen to be same parties, having the same addr having the same address. As regards the submission of the ess. As regards the submission of the appellant viz appellant viz-a-viz the notices u/s 133(6) having been served viz the notices u/s 133(6) having been served during the assessment proceedings in A.Y 2013 during the assessment proceedings in A.Y 2013-14, it is observed 14, it is observed that each A. Y is independent A. Y and service of the notices in that each A. Y is independent A. Y and service of the notices in that each A. Y is independent A. Y and service of the notices in subsequent year does not c subsequent year does not change and effect the conclusion drawn hange and effect the conclusion drawn in the A. Y under consideration. From the above, it is clear that the A. Y under consideration. From the above, it is clear that the A. Y under consideration. From the above, it is clear that the appellant did not produce the books of account, the purchases and appellant did not produce the books of account, the purchases and appellant did not produce the books of account, the purchases and sales remained sales remained unverified and also the peculiar circumstance of unverified and also the peculiar circumstance of the case that the the case that the appellant is stated to be doing the business from appellant is stated to be doing the business from a small residential flat, which is occupied by the family as well a small residential flat, which is occupied by the family as well a small residential flat, which is occupied by the family as well and that there can not be any place left to accommodate and that there can not be any place left to accommodate and that there can not be any place left to accommodate computers worth more than Rs 40 lakh and any employees in that computers worth more than Rs 40 lakh and any employees in that computers worth more than Rs 40 lakh and any employees in that place. However the AO place. However the AO's order is silent on the basis of estimating 's order is silent on the basis of estimating the profit. I am of the view that the estimation of profit at 3% would the profit. I am of the view that the estimation of profit at 3% would the profit. I am of the view that the estimation of profit at 3% would be reasonable in view of the facts and circumstance of the case. be reasonable in view of the facts and circumstance of the case. be reasonable in view of the facts and circumstance of the case. Accordingly the AO is directed to estimate the profits at 3% and Accordingly the AO is directed to estimate the profits at 3% and Accordingly the AO is directed to estimate the profits at 3% and reduce the addition, accordingly. Thus the ground of appeal is e addition, accordingly. Thus the ground of appeal is e addition, accordingly. Thus the ground of appeal is partly allowed partly allowed.” 4.2 We have carefully considered the rival submissions advanced We have carefully considered the rival submissions advanced We have carefully considered the rival submissions advanced by the parties and have meticulously examined the material placed by the parties and have meticulously examined the material placed by the parties and have meticulously examined the material placed
M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 7 & 5917/MUM/2024 on record. The assessee contends that the trading of software has on record. The assessee contends that the trading of so on record. The assessee contends that the trading of so been carried out consistently, and in subsequent years, the been carried out consistently, and in subsequent years, the been carried out consistently, and in subsequent years, the Assessing Officer had issued notices under Section 133(6) of the Assessing Officer had issued notices under Section 133(6) of the Assessing Officer had issued notices under Section 133(6) of the Act, which were duly served upon and complied with by the relevant Act, which were duly served upon and complied with by the relevant Act, which were duly served upon and complied with by the relevant parties. It is further submitted that, in view of the consistency in parties. It is further submitted that, in view of the parties. It is further submitted that, in view of the business operations, the gross profit rate applied by the Assessing business operations, the gross profit rate applied by the Assessing business operations, the gross profit rate applied by the Assessing Officer in the assessment year 2013 Officer in the assessment year 2013-14 ought to be applied to the 14 ought to be applied to the year under consideration as well. On the contrary, the learned year under consideration as well. On the contrary, the learned year under consideration as well. On the contrary, the learned Departmental Representative (DR) has argued Departmental Representative (DR) has argued that neither the that neither the purchase transactions nor the sales transactions of the assessee purchase transactions nor the sales transactions of the assessee purchase transactions nor the sales transactions of the assessee have been verified. It has been contended that the assessee is have been verified. It has been contended that the assessee is have been verified. It has been contended that the assessee is engaged in accommodation entries with the intent to evade tax, and engaged in accommodation entries with the intent to evade tax, and engaged in accommodation entries with the intent to evade tax, and therefore, the entire purchase amount shoul therefore, the entire purchase amount should be disallowed. Upon d be disallowed. Upon careful consideration, we find that the Assessing Officer has not careful consideration, we find that the Assessing Officer has not careful consideration, we find that the Assessing Officer has not disallowed the entire purchases but has instead rejected the books disallowed the entire purchases but has instead rejected the books disallowed the entire purchases but has instead rejected the books of accounts and estimated the gross profit from the trading activity. of accounts and estimated the gross profit from the trading activity. of accounts and estimated the gross profit from the trading activity. Furthermore, the assessee has n Furthermore, the assessee has not contested the invocation of ot contested the invocation of Section 145(3) of the Act but has only challenged the gross profit Section 145(3) of the Act but has only challenged the gross profit Section 145(3) of the Act but has only challenged the gross profit rate of 3% as sustained by the Learned Commissioner of Income rate of 3% as sustained by the Learned Commissioner of Income rate of 3% as sustained by the Learned Commissioner of Income Tax (Appeals) [CIT(A)], while the Revenue is aggrieved by the Tax (Appeals) [CIT(A)], while the Revenue is aggrieved by the Tax (Appeals) [CIT(A)], while the Revenue is aggrieved by the reduction of the gross profit rate reduction of the gross profit rate from 5% to 3%. It is our from 5% to 3%. It is our considered view that the estimation of the gross profit rate must be considered view that the estimation of the gross profit rate must be considered view that the estimation of the gross profit rate must be based on sound reasoning and comparable cases within the same based on sound reasoning and comparable cases within the same based on sound reasoning and comparable cases within the same or similar business. The authorities below have arrived at their or similar business. The authorities below have arrived at their or similar business. The authorities below have arrived at their respective estimations without cit respective estimations without citing any comparable instances to ing any comparable instances to M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 8 & 5917/MUM/2024 ITA No. 5766 justify their determination of the gross profit rate. In the absence of justify their determination of the gross profit rate. In the absence of justify their determination of the gross profit rate. In the absence of such a basis, it is imperative that the matter be remanded to the such a basis, it is imperative that the matter be remanded to the such a basis, it is imperative that the matter be remanded to the Assessing Officer for the limited purpose of reassessing the gross Assessing Officer for the limited purpose of reassessing the gross Assessing Officer for the limited purpose of reassessing the gross profit rate. The Assessing Officer shall take into consideration sessing Officer shall take into consideration sessing Officer shall take into consideration comparable cases of entities engaged in software trading during the comparable cases of entities engaged in software trading during the comparable cases of entities engaged in software trading during the relevant assessment year. Additionally, if deemed necessary, the relevant assessment year. Additionally, if deemed necessary, the relevant assessment year. Additionally, if deemed necessary, the Assessing Officer may also examine the gross profit rates declared Assessing Officer may also examine the gross profit rates declared Assessing Officer may also examine the gross profit rates declared by the assessee in preceding and succeeding assessment years to essee in preceding and succeeding assessment years to essee in preceding and succeeding assessment years to ensure a just and equitable determination. Accordingly, the matter ensure a just and equitable determination. Accordingly, the matter ensure a just and equitable determination. Accordingly, the matter stands stands stands remitted remitted remitted to to to the the the file file file of of of the the the Assessing Assessing Assessing Officer Officer Officer for for for reconsideration in the light of the observations made hereinabove. reconsideration in the light of the observations made hereinabove. reconsideration in the light of the observations made hereinabove. Accordingly, the ground No. 1 of the appeal of the assessee and Accordingly, the ground No. 1 of the appeal of the assessee and Accordingly, the ground No. 1 of the appeal of the assessee and ground Nos. 1 and 2 and 2 of the appeal of the Revenue of the appeal of the Revenue are allowed for statistical purposes.
In ground No. 2 2 of the appeal of the assessee disallowance on of the appeal of the assessee disallowance on account of depreciation of Rs.63,07,44 account of depreciation of Rs.63,07,446/- has been challenged. has been challenged. Upon due consideration of the material on record, it is observed Upon due consideration of the material on record, it is observed Upon due consideration of the material on record, it is observed that the Learned Assessing Officer has noted that during that the Learned Assessing Officer has noted that during that the Learned Assessing Officer has noted that during verification conducted by the Inspector of the Department, the fixed verification conducted by the Inspector of the Department, the fixed verification conducted by the Inspector of the Department, the fixed assets of the assessee could not be duly assets of the assessee could not be duly verified. Furthermore, the verified. Furthermore, the Assessing Officer has expressed skepticism regarding the feasibility Assessing Officer has expressed skepticism regarding the feasibility Assessing Officer has expressed skepticism regarding the feasibility of the assessee's business operations being conducted from his of the assessee's business operations being conducted from his of the assessee's business operations being conducted from his residential premises under normal circumstances. Before us, residential premises under normal circumstances. Before us, residential premises under normal circumstances. Before us, learned counsel for the assessee has learned counsel for the assessee has submitted that the assessee is submitted that the assessee is M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 9 & 5917/MUM/2024 willing to furnish all relevant documentary evidence in support of willing to furnish all relevant documentary evidence in support of willing to furnish all relevant documentary evidence in support of the existence of fixed assets, including bills, vouchers, installation the existence of fixed assets, including bills, vouchers, installation the existence of fixed assets, including bills, vouchers, installation reports, and records of electricity consumption. In light of this reports, and records of electricity consumption. In light of this reports, and records of electricity consumption. In light of this submission, it has been prayed that the matter be remanded to the een prayed that the matter be remanded to the een prayed that the matter be remanded to the file of the Assessing Officer for fresh verification. Having regard to file of the Assessing Officer for fresh verification. Having regard to file of the Assessing Officer for fresh verification. Having regard to the facts and circumstances of the case, and in the interest of the facts and circumstances of the case, and in the interest of the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit the matter to the Assessing justice, we deem it appropriate to remit the matter to the Assessing justice, we deem it appropriate to remit the matter to the Assessing Officer for reconsideration. The Assessing Officer shall conduct a r for reconsideration. The Assessing Officer shall conduct a r for reconsideration. The Assessing Officer shall conduct a fresh adjudication after affording the assessee an opportunity to fresh adjudication after affording the assessee an opportunity to fresh adjudication after affording the assessee an opportunity to produce documentary evidence substantiating the existence and produce documentary evidence substantiating the existence and produce documentary evidence substantiating the existence and installation of the fixed assets in question. The Assessing Officer installation of the fixed assets in question. The Assessing Officer installation of the fixed assets in question. The Assessing Officer shall verify such evidence in accordance with law and pass an order shall verify such evidence in accordance with law and pass an order shall verify such evidence in accordance with law and pass an order afresh on merits. The ground No. 2 of the appeal of the assessee is afresh on merits. The ground No. 2 of the appeal of the assessee is afresh on merits. The ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purpose. accordingly allowed for statistical purpose.
6. In ground No. In ground No. 3, the assessee has challenged addition of enged addition of Rs.7,14,90,183/- on account of unexplained credit. on account of unexplained credit. Upon a careful on account of unexplained credit. examination of the material on record, it is observed that the examination of the material on record, it is observed that the examination of the material on record, it is observed that the Learned Assessing Officer has taken note of the assessee’s trade Learned Assessing Officer has taken note of the assessee’s trade Learned Assessing Officer has taken note of the assessee’s trade payables amounting to payables amounting to ₹78,72,61,334/- and trade receivables and trade receivables amounting to ₹73,74,24,069/ ,74,24,069/-. The Assessing Officer, after . The Assessing Officer, after verification, determined the maximum outstanding balance as on verification, determined the maximum outstanding balance as on verification, determined the maximum outstanding balance as on 14.11.2011 at ₹7,14,90,183/ 7,14,90,183/-, which was considered as the peak , which was considered as the peak balance of the account and the fund requirement for running the balance of the account and the fund requirement for running the balance of the account and the fund requirement for running the business. Consequently, business. Consequently, the Assessing Officer treated the peak the Assessing Officer treated the peak
M/s Jasmine Computech Pvt. Ltd. M/s Jasmine Computech Pvt. Ltd. 10 & 5917/MUM/2024 balance outstanding in the bank account at balance outstanding in the bank account at ₹7,40,97,183/ 7,40,97,183/- as the assessee’s fund requirement and further classified the same as assessee’s fund requirement and further classified the same as assessee’s fund requirement and further classified the same as unexplained cash credit under the relevant provisions of the Act. unexplained cash credit under the relevant provisions of the Act. unexplained cash credit under the relevant provisions of the Act. The Learned CIT(A) als The Learned CIT(A) also upheld this finding. Before us, the learned o upheld this finding. Before us, the learned counsel for the assessee has submitted that the assessee is willing counsel for the assessee has submitted that the assessee is willing counsel for the assessee has submitted that the assessee is willing to furnish all necessary documentary evidence to justify the peak to furnish all necessary documentary evidence to justify the peak to furnish all necessary documentary evidence to justify the peak credit balance. Accordingly, it has been prayed that an opportunity credit balance. Accordingly, it has been prayed that an opportunity credit balance. Accordingly, it has been prayed that an opportunity be granted for such verification. Considering the facts and ed for such verification. Considering the facts and ed for such verification. Considering the facts and circumstances of the case, and in the interest of justice, we deem it circumstances of the case, and in the interest of justice, we deem it circumstances of the case, and in the interest of justice, we deem it appropriate to remit this issue to the file of the Assessing Officer for appropriate to remit this issue to the file of the Assessing Officer for appropriate to remit this issue to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall reconsider the fresh adjudication. The Assessing Officer shall reconsider th fresh adjudication. The Assessing Officer shall reconsider th matter after affording the assessee an opportunity to submit matter after affording the assessee an opportunity to submit matter after affording the assessee an opportunity to submit relevant documentary evidence in support of its claim. The relevant documentary evidence in support of its claim. The relevant documentary evidence in support of its claim. The Assessing Officer shall verify such evidence in accordance with law Assessing Officer shall verify such evidence in accordance with law Assessing Officer shall verify such evidence in accordance with law and render a fresh decision on the merits of the case. The ground and render a fresh decision on the merits of the case. and render a fresh decision on the merits of the case. No. 3 of the appeal of the assessee is also allowed for statistical No. 3 of the appeal of the assessee is also allowed for statistical No. 3 of the appeal of the assessee is also allowed for statistical purposes.
In the result, both the appeals of the assessee and the In the result, both the appeals of the assessee and the In the result, both the appeals of the assessee and the Revenue are allowed for statistical purposes. Revenue are allowed for statistical purposes.