What did the Tribunal hold?

The Tribunal held that since the books of account were not formally rejected, an ad-hoc addition of Rs. 1 lakh should meet the ends of justice. Item-wise additions were not warranted.

The assessee, engaged in manufacturing and trading of pulses, maintained books of account showing a GP rate of 5.85%. The Assessing Officer estimated the GP rate at 6.10% without rejecting the books, leading to an addition. The CIT(A) confirmed this addition.

What were the issues?

Whether the Assessing Officer can estimate a higher GP rate without rejecting the assessee's books of account, and the extent of addition permissible in such circumstances.

M/S. Savala Dal Mill, Solapur vs ITO | ITAT Pune 2019

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI D. KARUNAKARA RAO, AM

For Appellant: Shri M. K. Kulkarni

For Respondent: Shri Sachin Y. Jawale

Hearing: 17.12.2019Pronounced: 17.12.2019

PER D. KARUNAKARA RAO, AM : This appeal is filed by the assessee against the order of CIT(A)-9, Pune dated 24.06.2019 for the Assessment Year 2013-14. 2. Before me, at the outset, ld. Counsel for the assessee submitted that the assessee is engaged in manufacturing and trading activities of Pulses and Toor Dal and maintained the books of account. As per the books of account, the GP rate for the year is 5.85%. Without expressly rejecting the books of account, the Assessing Officer estimated the GP rate at 6.10%. The CIT(A) confirmed the same which resulted in an addition of Rs.2,52,595/-. Without going to the merits and other legal issue, ld. Counsel submitted that the appeal can be partly allowed by confirming the part of the addition made by the Assessing Officer in the assessment.

On the other hand, the ld. DR for the Revenue relied heavily on the orders of the revenue authorities.

On hearing both the parties, I am of the opinion that confirming the addition of Rs.1 lakh on ad-hoc basis should be met the ends of justice. As such, the books of account were not rejected formally by the Assessing Officer. Considering on ah-hoc addition on the profits of the assessee, I am of the opinion that there is no scope for item-wise additions as mentioned in the grounds no.2 and 3 of the appeal. Accordingly, the ground no.1 raised by the assessee is partly allowed. Ground no.2 and 3 are allowed. Ground no.4, being consequential, and ground no.5, being general, are dismissed.

In the result, the appeal of the assessee is partly allowed. Order pronounced on this 17th day of December, 2019. (D. KARUNAKARA RAO) लेखा सद" / ACCOUNTANT MEMBER पुणे / Pune; "दनांक Dated : 17th December, 2019. Sujeet आदेश क" "ितिलिप अ"ेिषत/Copy of the Order is forwarded to : अपीलाथ" / The Appellant;

""यथ" / The Respondent;

2.3.

The CIT(A)-9, Pune;

The Pr. CIT-6, Pune; िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, पुणे “एक-सद"य मामला” /

DR ‘SMC’, ITAT, Pune; गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स"यािपत "ित //// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

M/S. SAVALA DAL MILL,SOLAPUR vs. INCOME-TAX OFFICER, WARD - 2 (5), SOLAPUR

What did the Tribunal hold?

What were the facts?

What were the issues?

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