SUSHANTA ROY,KOLKATA vs. ACIT, CIR-51, KOLKATA, KOLKATA

order : November 08, 2017 ORDER This appeal by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-15, (hereinafter the ‘ld. CIT(A)’), dated 22.03.2016 passed u/s 144 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2010-11. 2. The assessee filed revised grounds of appeal

which reads as follows: “1. That on the facts and circumstances of the case and in law, the Ld. CIT(A), before upholding the Assessment Order and the underlying additions, and thus, dismissing the Appeal, ought to have carried out an independent verification of records and evidence produced and on record, rather than just reproducing the comments and observations of the Ld. ACIT.

2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) should not have arbitrarily upheld the Rejection of Books u/s 145(3) and the consequent estimation of Gross Profit at 6.9% on Sales, causing an addition of Rs.1014426.00, merely on the alleged reasoning of non- production of Cash Book and Stock Register, while by means of evidence and explanations produced and despite the independent verification of the major expenses, no defect or flow in regard to the Audited Accounts and books of account and the profit declared could be established.

3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) should not have upheld the estimation of Profit and the consequent addition of Rs.1014426.00 u/s. 145(3), on the allegation 2 Sushanta Roy Assessment Year: 2010-11 of absence of Stock Register, while no flaw in regard to purchase and sales figures could be substantiated in Assessment.

4. Even otherwise, the Ld. CIT(A) should not have upheld the estimation of Profit at the higher rate of 6.9% , by endorsing the recourse to Sec. 145(3), after not appreciating a rise in the volume of sales and the magnitude of gross profit, compared to last year.

5. Without prejudice to the foregoing Grounds, Ld. CIT(A) should have appreciated that Assessment Proceeding for being related to the sole and specific issue of genuineness of Commission, under the CASS based scrutiny system and thus, having limited purpose I and scope, the Ld. Respondent had acted contrary to the mandatory CBDT Circular, by proceeding to verify other unrelated matters.

6. The Appellant craves leave to amend the grounds, and also to go for additional ground, either, before and during the Appeal hearing.”

3. After hearing rival contentions, hold as follows: (a) The ld. Counsel for the assessee submitted that he has withdrawn Ground No.5 for the reason that he has perused the assessment records and is convinced that the case has been selected for complete scrutiny and not for limited purpose and scope, as was the wrong impression of the assessee. Thus, this ground is dismissed as not pressed. (b) The ld. Counsel for the assessee does not press Ground No.1, 2 & 3. Thus, these grounds are also dismissed as not pressed. This leaves us with Ground No.4 which is on the issue of estimation of gross profit. The assessee’s case is that the estimation is excessive. He files a chart and claims that if the incentive is excluded, then the percentage of profit disclosed by the assessee is more than the previous year ended on 31.03.2008 and 31.03.2009. The chart is extracted for ready reference – Statement showing comparative G.P. rate based on purchases and sales only (after neutralizing the effect of incentives included in Gross Profit For the year ended 31.03.2009 Sales (excl. G.P Incentives & G.P. net of % of Net Paper incentives & included in Incentives G.P. on Net Book Discounts (net G.P Sales Page No. sales) 1 2 3 4 =(2) – (3) 5 31.03.2010 57,307,570.78 2,939,796.00 1,575,363.00 1,364,433.00 2.38 4 (current