K.MEENAKSHI,PONDICHERRY vs. ITO WARD-4, PONDICHERRY

Though the assessee has raised several grounds, the only effective ground to be decided in this appeal is as to whether the Ld.CIT(A) was justified in confirming the action of the AO in determination of estimated gross profit percentage @9.3% in the facts and circumstances of the case.

The assessee is an individual engaged in the business of liquor trading under the name and style of M/s.Himalayan Liquors. She had filed return of income for the AY 2016-17 admitting a total income of `7,20,540/-. The assessee had admitted gross profit @4.21%, which, in the opinion of the Ld.AO, was very low when compared to the previous years. The Ld.AO during the course of assessment proceedings called for the reasons for reduction in gross profit percentage together with details of closing stock with both quantity and value. The Ld.AO observed that the assessee had not submitted the said details before him. The Ld.AO rejected the books of accounts of the assessee and proceeded to estimate the gross profit @9.3% being the average gross profit percentage of the last three years and determined the taxable income accordingly. This action of the Ld.AO was upheld by the Ld.CIT(A). Aggrieved, the assessee is in appeal before us.

We have heard the rival submissions and perused the materials available on record. We find that the Ld.AR placed on record a copy of show cause notice issued by the Ld.AO through e-mail dated 18.12.2018, wherein, the Ld.AO had sought to reject the books of accounts of the assessee and estimate the gross profit @9.3% for determination of total income. In the said show cause notice, the next date of hearing was scheduled on 20.12.2018 at 12:30 P.M. The Ld.AR drew our attention that the said show cause notice was received through e-mail on 18.12.2018 at 07:34 P.M. seeking for details on 20.12.2018 at 12:30 P.M. and assessment was finally completed on 21.12.2018 as evident from the Assessment Order. He argued that the purchase and sales reported by the assessee were accepted by the Ld.AO and were duly subjected to Tax Collection at Source (TCS).

We have gone through the above document and we find lot of force in the argument of the Ld.AR that the assessee was not provided sufficient time by the Ld.AO in the instant case to furnish the requisite details.

In the result, the appeal filed by the assessee is allowed for statistical purposes.