MARIMUTHU VISWANATHAN,ERODE vs. ITO-WARD-2(1), , ERODE

The first issue in this appeal of assessee is against the order of the ld. CIT(A) confirming the action of the ld. Assessing Officer in making addition in gross profit instead of net profit. For this, assessee has raised ground No.4 which reads as under:-

The brief facts of the case are that assesseeis in the business of milk and milk products, curd etc., selling to small and medium size vendors and deriving commission income out of its business. Ld. Assessing Officer noted that assessee turnover as per books of accounts and as per bank account there is difference of gross profit to the extent of ₹26,92,458/-. The ld. Assessing Officer accordingly after detailed verification of books of accounts and documents produced before him added the difference of gross profit of ₹26,92,458/- and assessee also agreed to this addition being the difference. Aggrieved, assessee carried this matter to the ld. CIT(A).

Assessee admitted that it had not included transaction mentioned in the bank account to the extent of ₹1,31,14,430/- which are sales transaction and there is a difference in gross profit due to difference in turnover. The only argument before the ld. CIT(A) was that on this, difference in turnover of ₹1,31,14,430/- only net profit is to be assessed and not gross profit. According to the assessee, the net profit ratio is 3.01% and thereby addition could have been made to ₹5,39,402/- instead of ₹26,92,458/-. But the ld. CIT(A) not accepted the plea of the assessee and confirmed the action of the Assessing Officer. Aggrieved, now theassesseeis in appeal before the Tribunal.

I have heard rival contentions and gone through facts and circumstances of the case. The only plea made before me by the ld. Counsel for the assessee is that addition is to be restricted on net profit and not on gross profit. When a query was put to ld. Counsel for the assessee how the books of accounts will match in case only net profit is added to the capital account, where balancing figure of ₹21,53,056/- (Gross profit ₹26,92,458/- (-) Net Profit ₹5,39,402/-) will go,ld. Counsel for the assessee could not reply. As the books of accounts will not match, the ld. Assessing Officer had rightly pointed out that in the book of accounts there is difference of gross profit and assessee also agreed during the course of hearing that there cannot be balancing figure unless and until gross profit is added. Hence, I find no infirmity in the orders of the ld. CIT(A) and that of ld. Assessing Officer and accordingly, this ground raised by the assessee is dismissed.

The next issue in this appeal of assessee is as regards to ld. CIT(A) confirming the action of the ld. Assessing Officer in making addition being capital introduced as on 01.04.2014. For this, assessee has raised ground No.5, which reads as under:-

I have heard rival contentions and gone through facts and circumstances of the case. I noted that assessee only made submissions that opening capital introduced as on 01.04.2014 amounting to ₹9,00,000/- is out of earlier year savings and assessee could not file any details before the ld. Assessing Officer or before ld. CIT(A). However, ld. Counsel for the assesseerequested for telescoping of this amount with that of the addition made in the gross profit cannot be accepted for a reason that capital introduced as on 01.04.2014 cannot be said to be earned by gross profit on the very first day of the year because gross profit is earned is spread over the full year and hence this plea of the assessee is also rejected and the order of the ld. CIT(A) is confirmed and this issue of the assessee is also dismissed.

In the result, the appeal of the assessee in 2015-2016 stands dismissed.