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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER Assessment Year: 2013-14 Ranjit Gokulbhai Paraliya, vs. Income Tax Officer, Fakari Complex, Ward – 5, Surendranagar. Near Talav, Limdi – 353 421. [PAN – BGMPP 6317 E] (Appellant) (Respondent) Appellant by : Shri D.M. Rindani, AR Respondent by : Shri Aarsi Prasad, CIT (DR) Date of hearing : 02.08.2022 Date of pronouncement : 26.08.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the assessee against the order dated 30.08.2019 passed by CIT(A)-7, Ahmedabad for the Assessment Year 2013-14.
The assessee has raised the following ground of appeal:
“1. The Learned Commissioner of Income Tax (Appeals)-7, Ahmedabad erred in estimating profit @ 40% on gross sales of Rs.9,10,095/- as against Rs.1,84,293/- shown by appellant in its profit and loss account.”
An Information was received by the Department that the assessee deposited cash amounting to Rs.10,00,000/- and more in his savings bank account. Therefore, the case for A.Y. 2013-14 was reopened after recording reasons. Despite giving several opportunities, the assessee has not appeared before the Assessing Officer and, therefore, the Assessing Officer passed order under Section 144 read with Section 147 of the Income Tax Act, 1961 thereby making addition on account of unexplained money under Section 69A of the Act amounting to Rs.21,84,960/-
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. AR submitted that the assessee filed additional evidences under Rule 46A before the CIT(A). The CIT(A) called for remand report from the Assessing Officer and subsequently made the observations that the books of account submitted by the assessee in the appellate proceedings cannot be considered to be reliable and it is reasonable to estimate the profit from his trading business at 40% and gross sale which were worked out to Rs.9,10,095/- on turnover of Rs.22,75,238/-. The Ld. AR submitted that the assessee has disclosed the sale of Rs.22,75,000/- in Profit & Loss account and books were never rejected at any stage. The assessee has given not only five bills but purchase bills related to sales during the remand proceedings before the CIT(A). The average profit rate is taken as 8% and thus profit cannot exceed from estimated profits. Thus, the CIT(A) has made exorbitant estimate of profit at 40% of gross sale without any basis. The Ld. AR submitted that the CIT(A) should have taken cognisance of the reconciliation which is filed at page 72 of the Paper Book.
The Ld. DR relied upon the Assessment Order and the Order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that in respect of credit note credited by the company but not accounted by the assessee and the reconciliation of the difference with GSP Crop Science Pvt. Ltd. for A.Y. 2012-13 was filed by the assessee before the CIT(A) which was not considered. Therefore, it will be appropriate that the gross profit should have been taken at 8% which is the actual profit of the assessee. The objections of CIT(A) that the books of accounts are not reliable is without any basis and cannot be the sole basis for estimating the exorbitant gross profit at 50%. Therefore, order of the CIT(A) is set aside and appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on this 26th day of August, 2022.