MIRA SHAW,HOWRAH vs. ACIT, CIR-46, KOLKATA, KOLKATA

ORDER

Per Shri M.Balaganesh, AM

2.1. The brief facts of this issue is that the assessee is a manufacturer cum retailer of non ferrous metals and running a concern under the name and style of M/s Mira Moulders and Traders. The Books of accounts were duly produced by the assessee and the same were test checked by the Learned AO. This fact is duly mentioned in para 2 of the assessment order. The Learned AO found that the Gross Profit reported for the year under appeal was 7.51% of turnover as against 12.6% shown in the earlier year. Accordingly, he proceeded to reject the books of accounts and resorted to make an estimation of gross profit and added Rs.11,06,000/- being 5% of turnover to the 2 Mira Shaw. A.Yr.2007-08 gross profit. On first appeal, the Learned CITA restricted the addition to Rs. 8,84,800/- worked out at 4% of turnover thereby granting relief of Rs. 2,21,200/-. Aggrieved, the assessee is in appeal before us.

2.2. None appeared on behalf of the assessee. Shri.S.S.Alam, JCIT, the Learned DR argued on behalf of the revenue.

2.3. The Learned DR argued that the books of accounts were not produced by the assessee before the Learned AO and hence the AO is right in making an estimation of gross profit as a percentage of turnover to be in line with the gross profit percentage reported in the earlier year.

2.4. We have heard the Learned DR and perused the materials available on record. We find that the books of accounts were indeed produced before the Learned AO by the assessee which were also test checked by the Learned AO. It is observed that the Learned AO resorted to reject the books of accounts u/s 145(3) of the Act without pointing out any defects in the same. Accordingly, the action of Learned AO resorting to make an estimated addition of gross profit by adding 5% of turnover to be comparable with the gross profit percentage declared in the earlier year is not appreciated. The estimation of gross profit at 5% on turnover has been reduced to 4% on turnover by the Learned CIT(A) on the same reasoning. We find that the assessee had produced the books of accounts during the original assessment proceedings and the same were test checked by the Learned AO which fact is duly mentioned by him in para 2 of the assessment order. It is also observed that the Learned AO had accepted the books of accounts produced by the assessee before him for making the addition made in the sum of Rs. 2,11,026/- towards amounts received from Sundry Debtors which addition has been separately adjudicated herein below. This goes to prove that the Learned AO had partially accepted the books of accounts of the assessee. In view of this, we hold that without pointing out the defects, if any, in the books of accounts produced before the Learned AO, the action of the Learned AO in rejecting the books of accounts u/s 145(3) of the Act and accordingly resorting to 3 Mira Shaw. A.Yr.2007-08 make an estimation of gross profit to make it comparable with that of earlier year is not appreciated and we have no hesitation in directing the Learned AO to delete the entire addition made in this regard. Accordingly, the ground raised by the assessee in this regard is allowed.

3.1. The brief facts of this issue is that the assessee produced a copy of ledger account of M/s Laha Industries wherein a sum of Rs. 2,11,026.90 was shown to have received in cash from the said sundry debtor party. But on verification of Sundry Debtors Balance as on 31.3.2006 from the Balance sheet of the assessee, the Learned AO found that there was no balance outstanding as receivable from Laha Industries. Accordingly he resorted to make an addition as unexplained money u/s 69A in respect of amounts received from Laha Industries to the tune of Rs. 2,11,026/- which was also upheld by the Learned CIT(A) on first appeal. Aggrieved, the assessee is in appeal before us.

3.2. The Learned DR vehemently supported the orders of the lower authorities.

3.3. We have heard the Learned DR and perused the materials available on record. We find that the assessee had produced the ledger copy of Laha Industries wherein a sum of Rs. 2,11,026/- was shown to have been received in cash during the assessment year under appeal whereas no sum was outstanding as on 31.3.2006 in respect of the aforesaid party. However, we find that the said ledger account is not produced before us for our verification. But we feel that this receipt might have been received in respect of sale made to the sundry debtor Laha Industries during the assessment year under appeal. This understanding of ours has got credence from the fact that the said receipt of Rs. 2,11,026/- is not reflected as outstanding sums payable to Laha Industries as on 31.3.2007 (i.e the assessment year under appeal). Since none

4 Mira Shaw. A.Yr.2007-08 represented on behalf of the assessee, this point could not be clarified to the bench. No finding is also given with regard to this fact either in the assessment order or in the appellate order. Hence , we deem it fit and appropriate, in the facts and circumstances of this case, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard in this regard. Accordingly, this ground of the assessee is allowed for statistical purposes.

Order pronounced in the court on 16.09.2015.