BEACH MINERAALS COMPANY,TIRUNELVELI V. ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI

CO 33/CHNY/2024

AI Insights

The case involves M/s. Beach Minerals Co., which was subjected to a search operation under Section 132 of the Income-tax Act, 1961, on 25.10.2018. The search revealed two sets of accounts maintained by the company, one for financial purposes and another for income tax purposes, leading to suspicions of income suppression and expense inflation. The Assessing Officer (AO) made disallowances on several heads of expenses due to lack of documentary evidence, totaling significant amounts for the assessment years 2015-16 and 2016-17. The CIT(A) rejected the books of accounts but found the total disallowance excessive, estimating profits at a lower rate based on previous Tribunal decisions. The Tribunal, while agreeing with the rejection of the books, modified the profit estimation rate to 2.21% based on a detailed examination of the company's financial data and previous assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107503 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-11-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-09-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 30-05-2024
• Other Referred Cases: Indwell Constructions Vs. CIT, Banwari Lal Banshidhar vs CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R. CLEMENT RAMESH
• Assessee Lawyers: S. SRIDHAR
• Keywords: Business income; Rejection of books of accounts; Wrong claim
• Section: 144; 143(3); 250; 251; 132; 153A; 13; 145; 10B; 145(3); 43D

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ \u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद\f क े सम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.1465 & 1466/Chny/2023 िनधा\u000eरणवष\u000e/Assessment Years: 2015-16 & 2016-17 & Cross-Objection Nos.33 & 34/Chny/2024 िनधा\u0010रणवष\u0010/Assessment Years: 2015-16 & 2016-17 The ACIT, Central Circle-1, Madurai-625 002. v. M/s. Beach Minerals Co., 135, Tiruchendur Road, Kuttam, Tirunelveli-627 651. [PAN: AAJFB 3329 C] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent / Cross- Objector) Department by : Mr. R. Clement Ramesh – Kumar, CIT Assessee by : Mr. S. Sridhar, Advocate सुनवाईक\u001cतारीख/Date of Hearing : 04.09.2024 घोषणाक\u001cतारीख /Date of Pronouncement : 26.11.2024 आदेश / O R D E R PER ABY T. VARKEY, JM: These cross appeals preferred by the assessee and the Revenue are arising out of the common appellate order passed by the Learned Commissioner of Income Tax (Appeals)-19, Chennai [in short ‘CIT(A)’] dated 18.10.2023 in relation to the assessment orders dated 28.08.2021 & 26.08.2021 passed u/s 143(3)/153A of the Income-tax Act, 1961 [in short ‘the Act’] for the Assessment Years [in short ‘AY’] 2015 17. 2. Briefly noted the facts of the case are that, the assessee engaged in the business of minerals which are primarily exported to foreign countries. A search action u/s 132 of the Act upon the assessee on 25.10.2018. In the course of search, several documents & electronic material were found and seized pursuant to which the AO Act for the relevant AYs 2015 material viz., tally data, it was noted that the assessee was maintaining two sets of accounts, one titled “ the accounts manager of the assessee affirmed in his statement recorded u/s 132(4) of the Act that the assessee was maintaining parallel sets of accounts for banking & financial purposes and other for income purposes. The AO in the course of assessment inferred that the accounts maintained under the title “ inflating expenses in the tally data. After calling for explanation from the assessee, the AO observed that the assesse and several expenses were not supported by documentary evidences and therefore made disallowances out of several heads of expenses aggregating to Rs.31,73,00,700/ 2016-17 respectively. ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 2 :: short ‘the Act’] for the Assessment Years [in short ‘AY’] 2015 noted the facts of the case are that, the assessee engaged in the business of mining, processing and refining beach minerals which are primarily exported to foreign countries. A search action u/s 132 of the Act upon the assessee on 25.10.2018. In the course of search, several documents & electronic material were found and seized rsuant to which the AO inter alia initiated proceedings u/s 153A of the Act for the relevant AYs 2015-16 & 2016-17. From the seized electronic tally data, it was noted that the assessee was maintaining two sets of accounts, one titled “ori” and other titled “IT”. Upon enquiry, the accounts manager of the assessee affirmed in his statement recorded u/s 132(4) of the Act that the assessee was maintaining parallel sets of accounts for banking & financial purposes and other for income s. The AO in the course of assessment inferred that the accounts maintained under the title “IT” was in form of suppression of income by inflating expenses in the tally data. After calling for explanation from the assessee, the AO observed that the assessee had inflated the expenses and several expenses were not supported by documentary evidences and therefore made disallowances out of several heads of expenses aggregating to Rs.31,73,00,700/- & Rs.22,00,26,846/- in AYs 2015 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. short ‘the Act’] for the Assessment Years [in short ‘AY’] 2015-16 & 2016- noted the facts of the case are that, the assessee-firm is mining, processing and refining beach minerals which are primarily exported to foreign countries. A search action u/s 132 of the Act upon the assessee on 25.10.2018. In the course of search, several documents & electronic material were found and seized initiated proceedings u/s 153A of the 17. From the seized electronic tally data, it was noted that the assessee was maintaining ”. Upon enquiry, the accounts manager of the assessee affirmed in his statement recorded u/s 132(4) of the Act that the assessee was maintaining parallel sets of accounts for banking & financial purposes and other for income-tax s. The AO in the course of assessment inferred that the accounts ” was in form of suppression of income by inflating expenses in the tally data. After calling for explanation from the e had inflated the expenses and several expenses were not supported by documentary evidences and therefore made disallowances out of several heads of expenses in AYs 2015-16 & 3. Being aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who upon examining the contentions of the assessee in light of the findings of the AO, took a view that, the books of accounts of the assessee was not reliable an unable to support the expenses with proper bills and vouchers. The Ld. CIT(A) accordingly rejected the books of accounts. At the same time, according to Ld. CIT(A), the disallowance of entire expenses made by the AO was excessive as it was resulting in abnormally high profits which was held to be not appropriate in assessee’s line of business. Following the order passed by the coordinate bench of this Tribunal in assessee’s own case for earlier AY 2013 assessee for the relevant AYs at 2.21%. The Ld. CIT(A) accordingly partly allowed the appeals of the assessee. The relevant findings of the Ld. CIT(A) are noted to be as under: “7.5.8 The undersigned has duly examined the additional submi made by the Appellant Firm. There exists no doubt about the maintenance of two sets of books of accounts by the Appellant Firm. The AO on the basis of the statement recorded during the course of the search from the Accounts Manager has identified tha “ori” and another is “IT” which denotes that “Original” and “Income Tax”. The AO in the assessment order has made a finding that in the accounts maintained under the title “Ori” is the original books of accounts where all the receipts an reflected. In the accounts under the title “IT” is the accounts where expenditures have been inflated and the net income is arrived to disclose the same in the return of income filed. However, the Appellant during the course o the “original” and “IT” is wrong and the appropriate term is “audited” and “unaudited”. The undersigned has considered that the terming is ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 3 :: eing aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who upon examining the contentions of the assessee in light of the findings of the AO, took a view that, the books of accounts of the assessee was not reliable and that the assessee was unable to support the expenses with proper bills and vouchers. The Ld. CIT(A) accordingly rejected the books of accounts. At the same time, d. CIT(A), the disallowance of entire expenses made by the it was resulting in abnormally high profits which was held to be not appropriate in assessee’s line of business. Following the order passed by the coordinate bench of this Tribunal in assessee’s own case for earlier AY 2013-14, the Ld. CIT(A) estimated the profits of the assessee for the relevant AYs at 2.21%. The Ld. CIT(A) accordingly partly allowed the appeals of the assessee. The relevant findings of the Ld. CIT(A) are noted to be as under:- The undersigned has duly examined the additional submi made by the Appellant Firm. There exists no doubt about the maintenance of two sets of books of accounts by the Appellant Firm. The AO on the basis of the statement recorded during the course of the search from the Accounts Manager has identified that one is titled as “ori” and another is “IT” which denotes that “Original” and “Income Tax”. The AO in the assessment order has made a finding that in the accounts maintained under the title “Ori” is the original books of accounts where all the receipts and expenditures have been duly reflected. In the accounts under the title “IT” is the accounts where expenditures have been inflated and the net income is arrived to disclose the same in the return of income filed. However, the Appellant during the course of appellate proceedings has contended that terming the “original” and “IT” is wrong and the appropriate term is “audited” and “unaudited”. The undersigned has considered that the terming is 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. eing aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who upon examining the contentions of the assessee in light of the findings of the AO, took a view that, the books of d that the assessee was unable to support the expenses with proper bills and vouchers. The Ld. CIT(A) accordingly rejected the books of accounts. At the same time, d. CIT(A), the disallowance of entire expenses made by the it was resulting in abnormally high profits which was held to be not appropriate in assessee’s line of business. Following the order passed by the coordinate bench of this Tribunal in assessee’s own e profits of the assessee for the relevant AYs at 2.21%. The Ld. CIT(A) accordingly partly allowed the appeals of the assessee. The relevant findings of the Ld. The undersigned has duly examined the additional submission made by the Appellant Firm. There exists no doubt about the maintenance of two sets of books of accounts by the Appellant Firm. The AO on the basis of the statement recorded during the course of the t one is titled as “ori” and another is “IT” which denotes that “Original” and “Income Tax”. The AO in the assessment order has made a finding that in the accounts maintained under the title “Ori” is the original books of d expenditures have been duly reflected. In the accounts under the title “IT” is the accounts where expenditures have been inflated and the net income is arrived to disclose the same in the return of income filed. However, the Appellant f appellate proceedings has contended that terming the “original” and “IT” is wrong and the appropriate term is “audited” and “unaudited”. The undersigned has considered that the terming is inappropriate to arrive a meaningful decision in respect of variou raised by the Appellant in the grounds of appeal. 7.5.9 The Appellant during the course of appellate proceedings has submitted a detailed reason for the incomplete and erroneous manner in which the books of accounts were maintained. The main reaso poor maintenance of accounts was the capturing of primary accounting data in the tally accounts by the operational staff who were not well versed in accounting and the absence of qualified accounting staff at multiple remote locations where the p the Appellant are situated. The multiple tally accounts found during the search was due to the fact that making accounting entries at multiple locations. The non transactions at the time making the entries in the tally accounts and omission to make accounting entries contemporaneously led to either absence of narration or incorrect / erroneous narration for the entries made in the books of accounts. The Appellant also expla were wrongly made by crediting the ledger accounts of group companies while debiting the relevant expenditure account in the books of the Appellant Firm in cases where the payments were made by the Appellant Firm itself from the borrowing companies. The Appellant also explained that while crediting the ledger account of group companies, mistakes occurred in adopting the name of the group company due to similarity in the names of various group companies. The Appellant the discrepancies pointed out by the AO during the course of assessment proceedings and also unable to furnish the bills and vouchers in support of the expenditure genuinely incurred by it, in view of passage of time, frequent changes in the staff handling accounts and multiplicity of group companies. 7.5.10 The undersigned has carefully examined the submissions adduced by the Appellant to substantiate the maintenance of multiple accounts. At the outset there returned by the Appellant by both the AO and the Appellant. 7.5.11 In the instant case of the Appellant the undersigned is of the view that the reasons explained by the Appellant for the discrepancies that occurred in assessment order are reasonable and acceptable having regard to the nature of the business, the remote locations where the business operations are carried out, non such remote locations, multiplicity of group companies with similar sounding names and frequent intergroup company transactions. Notwithstanding the same, once the discrepancies in the books of accounts have been identified by the AO and the Appellant ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 4 :: inappropriate to arrive a meaningful decision in respect of variou raised by the Appellant in the grounds of appeal. The Appellant during the course of appellate proceedings has submitted a detailed reason for the incomplete and erroneous manner in which the books of accounts were maintained. The main reaso poor maintenance of accounts was the capturing of primary accounting data in the tally accounts by the operational staff who were not well versed in accounting and the absence of qualified accounting staff at multiple remote locations where the processing plant and warehouses of the Appellant are situated. The multiple tally accounts found during the search was due to the fact that making accounting entries at multiple locations. The non-availability of accurate information regarding the ons at the time making the entries in the tally accounts and omission to make accounting entries contemporaneously led to either absence of narration or incorrect / erroneous narration for the entries made in the books of accounts. The Appellant also explained that entries were wrongly made by crediting the ledger accounts of group companies while debiting the relevant expenditure account in the books of the Appellant Firm in cases where the payments were made by the Appellant Firm itself from the borrowings made from such group companies. The Appellant also explained that while crediting the ledger account of group companies, mistakes occurred in adopting the name of the group company due to similarity in the names of various group companies. The Appellant also explained that it was unable to reconcile the discrepancies pointed out by the AO during the course of assessment proceedings and also unable to furnish the bills and vouchers in support of the expenditure genuinely incurred by it, in view of time, frequent changes in the staff handling accounts and multiplicity of group companies. The undersigned has carefully examined the submissions adduced by the Appellant to substantiate the maintenance of multiple accounts. At the outset there exists no dispute about the turnover returned by the Appellant by both the AO and the Appellant. In the instant case of the Appellant the undersigned is of the view that the reasons explained by the Appellant for the discrepancies that occurred in the books of accounts as identified by the AO in the assessment order are reasonable and acceptable having regard to the nature of the business, the remote locations where the business operations are carried out, non-availability of skilled accounting staf such remote locations, multiplicity of group companies with similar sounding names and frequent intergroup company transactions. Notwithstanding the same, once the discrepancies in the books of accounts have been identified by the AO and the Appellant 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. inappropriate to arrive a meaningful decision in respect of various issues The Appellant during the course of appellate proceedings has submitted a detailed reason for the incomplete and erroneous manner in which the books of accounts were maintained. The main reason for the poor maintenance of accounts was the capturing of primary accounting data in the tally accounts by the operational staff who were not well versed in accounting and the absence of qualified accounting staff at rocessing plant and warehouses of the Appellant are situated. The multiple tally accounts found during the search was due to the fact that making accounting entries at multiple availability of accurate information regarding the ons at the time making the entries in the tally accounts and omission to make accounting entries contemporaneously led to either absence of narration or incorrect / erroneous narration for the entries ined that entries were wrongly made by crediting the ledger accounts of group companies while debiting the relevant expenditure account in the books of the Appellant Firm in cases where the payments were made by the s made from such group companies. The Appellant also explained that while crediting the ledger account of group companies, mistakes occurred in adopting the name of the group company due to similarity in the names of various group also explained that it was unable to reconcile the discrepancies pointed out by the AO during the course of assessment proceedings and also unable to furnish the bills and vouchers in support of the expenditure genuinely incurred by it, in view of time, frequent changes in the staff handling accounts and The undersigned has carefully examined the submissions adduced by the Appellant to substantiate the maintenance of multiple exists no dispute about the turnover returned by the Appellant by both the AO and the Appellant. In the instant case of the Appellant the undersigned is of the view that the reasons explained by the Appellant for the discrepancies the books of accounts as identified by the AO in the assessment order are reasonable and acceptable having regard to the nature of the business, the remote locations where the business availability of skilled accounting staff in such remote locations, multiplicity of group companies with similar sounding names and frequent intergroup company transactions. Notwithstanding the same, once the discrepancies in the books of accounts have been identified by the AO and the Appellant was confronted with the same, the Appellant is required to reconcile the said discrepancies and produce bills and vouchers in support of the expenditures in respect of such discrepancies were pointed out by the AO. In cases where the discrepancies were ex the crediting of ledger accounts of a wrong group entity instead of the correct group entity while debiting the expenditure incurred by a group entity on behalf of the Appellant, it is necessary to identify the name of the correct group entity which incurred the expenditure on behalf of the Appellant and adduce evidence to show that the corresponding entry for the same is found in the ledger account of the Appellant in the books of such correct group entity. 7.5.12 In cases wher arising from the erroneous crediting of the ledger account of a group entity while debiting the expenditure account though the expenditure has been met by the Appellant itself out of received on transfer through banking channel from the group entity, it is necessary on the part of the Appellant to identify the relevant transactions of transfer of funds through bank from the group entity and incurring of expenditure by the Appellant from such funds by withdrawing th Moreover, in both the categories of discrepancies, it is necessary for the Appellant to produce the bills and vouchers in support of the relevant expenditure in respect of which the corresponding credit entries were erroneously made i 7.5.13 In this regard, the Appellant has brought out various constraints being faced by it in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by stating that it is unable time and frequent changes in the accounting staff working with the Appellant. It is considered that the said submission of the Appellant cannot be disregarded in view of the genuineness of the practical difficulties expressed by the Appellant. At the same time, it is also not possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are subjected to necessary reconciliation. 7.5.14 In this context, it is pertinent to observe that this is not a case where the Appellant is attempting to give incorrect reasons for its inability to produce the supporting bills and vouchers. Having regard to the discussion made in the preceding paragraphs, it observed that there is no dispute regarding the fact that the books of account of the Appellant for the assessment years under consideration are erroneous and inaccurate. Though the Appellant is unable to reconcile the discrepancies / inaccurac details of the relevant transactions along with the supporting bills and ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 5 :: confronted with the same, the Appellant is required to reconcile the said discrepancies and produce bills and vouchers in support of the expenditures in respect of such discrepancies were pointed out by the AO. In cases where the discrepancies were explained to be arising from the crediting of ledger accounts of a wrong group entity instead of the correct group entity while debiting the expenditure incurred by a group entity on behalf of the Appellant, it is necessary to identify the name of t group entity which incurred the expenditure on behalf of the Appellant and adduce evidence to show that the corresponding entry for the same is found in the ledger account of the Appellant in the books of such correct group entity. In cases where the discrepancy has been explained to be arising from the erroneous crediting of the ledger account of a group entity while debiting the expenditure account though the expenditure has been met by the Appellant itself out of received on transfer through anking channel from the group entity, it is necessary on the part of the Appellant to identify the relevant transactions of transfer of funds through bank from the group entity and incurring of expenditure by the Appellant from such funds by withdrawing the same from the bank. Moreover, in both the categories of discrepancies, it is necessary for the Appellant to produce the bills and vouchers in support of the relevant expenditure in respect of which the corresponding credit entries were erroneously made in the books of accounts. In this regard, the Appellant has brought out various constraints being faced by it in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by stating that it is unable to do so at present in view of the passage of time and frequent changes in the accounting staff working with the Appellant. It is considered that the said submission of the Appellant cannot be disregarded in view of the genuineness of the practical lties expressed by the Appellant. At the same time, it is also not possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are subjected to necessary reconciliation. is context, it is pertinent to observe that this is not a case where the Appellant is attempting to give incorrect reasons for its inability to produce the supporting bills and vouchers. Having regard to the discussion made in the preceding paragraphs, it needs to be observed that there is no dispute regarding the fact that the books of account of the Appellant for the assessment years under consideration are erroneous and inaccurate. Though the Appellant is unable to reconcile the discrepancies / inaccuracies by furnishing the correct details of the relevant transactions along with the supporting bills and 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. confronted with the same, the Appellant is required to reconcile the said discrepancies and produce bills and vouchers in support of the expenditures in respect of such discrepancies were pointed out by the plained to be arising from the crediting of ledger accounts of a wrong group entity instead of the correct group entity while debiting the expenditure incurred by a group entity on behalf of the Appellant, it is necessary to identify the name of t group entity which incurred the expenditure on behalf of the Appellant and adduce evidence to show that the corresponding entry for the same is found in the ledger account of the Appellant in the books of e the discrepancy has been explained to be arising from the erroneous crediting of the ledger account of a group entity while debiting the expenditure account though the expenditure has been met by the Appellant itself out of received on transfer through anking channel from the group entity, it is necessary on the part of the Appellant to identify the relevant transactions of transfer of funds through bank from the group entity and incurring of expenditure by the e same from the bank. Moreover, in both the categories of discrepancies, it is necessary for the Appellant to produce the bills and vouchers in support of the relevant expenditure in respect of which the corresponding credit entries were In this regard, the Appellant has brought out various constraints being faced by it in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by to do so at present in view of the passage of time and frequent changes in the accounting staff working with the Appellant. It is considered that the said submission of the Appellant cannot be disregarded in view of the genuineness of the practical lties expressed by the Appellant. At the same time, it is also not possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are is context, it is pertinent to observe that this is not a case where the Appellant is attempting to give incorrect reasons for its inability to produce the supporting bills and vouchers. Having regard to needs to be observed that there is no dispute regarding the fact that the books of account of the Appellant for the assessment years under consideration are erroneous and inaccurate. Though the Appellant is unable to ies by furnishing the correct details of the relevant transactions along with the supporting bills and vouchers the same cannot be taken as a reason to disallow the expenditure when the turnover is not disputed. 7.5.15 Even though the claims of the Appell account cannot be accepted in toto in the face of the discrepancies brought out by the AO in the Assessment Order, making disallowance of the major portion of expenditure in respect of which such discrepancies were noticed is also not a disallowance of entire expenditure in respect of which the discrepancies were found as sought to be done by the AO in the Assessment Order, the total income of the Appellant was assessed at Rs.32,10,88,220/ Rs.22,42,24,706/ turnover Rs. 102,27,63,096/ 2014-15 and 2015 7.5.16 The said assessment(s) have resulted in impliedly con the net profit of the Appellant at 31.39%, 36.07% for the FY(s) 2014 and 2015-16 respectively, which is abnormally high in the line of business of the Appellant Firm and not appropriate to the facts and circumstances of the case. It may be appr abnormality in the profit margin is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from wrong claims of expenditure by the Appellant. As per the provisions Commissioner of Income Tax Appeals, is entitled to make such enquiry as he thinks fit and may pass such other order in Appeal as he thinks fit. Thus, the undersigned while disposing of the appeal u/s 250 of the Act i entitled to enter into the shoes of the Assessing Officer and decide the issue. 7.5.17 In this background, it is considered that the books of accounts of the Appellant Firm, which are inaccurate, do not facilitate arriving at true and correct profits of rejected by invoking the provisions of Section 145(3) of the Act. Accordingly, the books of accounts of the Appellant Firm for the FY(s) 2014-15 and 2015 books of accounts, the business income of the Appellant Firm is required to be estimated under the said provisions, consequent to rejection of the books of accounts. 7.5.18 Now, the issue before the undersigned is that, what can be the reasonable profit that conduct of business. The Appellant Firm in the return of income filed has claimed the net profit margin at the rate of 0.37% and 0.68% for the FY(s) 2014-15 and 2015 ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 6 :: vouchers the same cannot be taken as a reason to disallow the expenditure when the turnover is not disputed. Even though the claims of the Appellant in the books of account cannot be accepted in toto in the face of the discrepancies brought out by the AO in the Assessment Order, making disallowance of the major portion of expenditure in respect of which such discrepancies were noticed is also not appropriate in the facts of the case. On making disallowance of entire expenditure in respect of which the discrepancies were found as sought to be done by the AO in the Assessment Order, the total income of the Appellant was assessed at Rs.32,10,88,220/ Rs.22,42,24,706/- for the AY(s) 2015-16 & 2016-17 as against the Rs. 102,27,63,096/- and Rs. 62,17,07,761/- for the FY(s) 15 and 2015-16 relevant to the AY(s) 2015-16 and 2016 The said assessment(s) have resulted in impliedly con the net profit of the Appellant at 31.39%, 36.07% for the FY(s) 2014 16 respectively, which is abnormally high in the line of business of the Appellant Firm and not appropriate to the facts and circumstances of the case. It may be appreciated that the said abnormality in the profit margin is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from wrong claims of expenditure by the Appellant. As per the provisions of section 250 and 251 of the Act, the Commissioner of Income Tax Appeals, is entitled to make such enquiry as he thinks fit and may pass such other order in Appeal as he thinks fit. Thus, the undersigned while disposing of the appeal u/s 250 of the Act i entitled to enter into the shoes of the Assessing Officer and decide the In this background, it is considered that the books of accounts of the Appellant Firm, which are inaccurate, do not facilitate arriving at true and correct profits of the Appellant Firm and they are required to be rejected by invoking the provisions of Section 145(3) of the Act. Accordingly, the books of accounts of the Appellant Firm for the FY(s) 15 and 2015-16 are hereby rejected. Thus, having rejected the ks of accounts, the business income of the Appellant Firm is required to be estimated under the said provisions, consequent to rejection of the books of accounts. Now, the issue before the undersigned is that, what can be the reasonable profit that can be attributable to the Appellant Firm in conduct of business. The Appellant Firm in the return of income filed has claimed the net profit margin at the rate of 0.37% and 0.68% for the 15 and 2015-16 relevant to the AY(s) 2015-16 and 2016 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. vouchers the same cannot be taken as a reason to disallow the ant in the books of account cannot be accepted in toto in the face of the discrepancies brought out by the AO in the Assessment Order, making disallowance of the major portion of expenditure in respect of which such discrepancies ppropriate in the facts of the case. On making disallowance of entire expenditure in respect of which the discrepancies were found as sought to be done by the AO in the Assessment Order, the total income of the Appellant was assessed at Rs.32,10,88,220/-and 17 as against the for the FY(s) 16 and 2016-17 The said assessment(s) have resulted in impliedly considering the net profit of the Appellant at 31.39%, 36.07% for the FY(s) 2014-15 16 respectively, which is abnormally high in the line of business of the Appellant Firm and not appropriate to the facts and eciated that the said abnormality in the profit margin is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from wrong claims of expenditure by the of section 250 and 251 of the Act, the Commissioner of Income Tax Appeals, is entitled to make such enquiry as he thinks fit and may pass such other order in Appeal as he thinks fit. Thus, the undersigned while disposing of the appeal u/s 250 of the Act is entitled to enter into the shoes of the Assessing Officer and decide the In this background, it is considered that the books of accounts of the Appellant Firm, which are inaccurate, do not facilitate arriving at the Appellant Firm and they are required to be rejected by invoking the provisions of Section 145(3) of the Act. Accordingly, the books of accounts of the Appellant Firm for the FY(s) 16 are hereby rejected. Thus, having rejected the ks of accounts, the business income of the Appellant Firm is required to be estimated under the said provisions, consequent to rejection of the Now, the issue before the undersigned is that, what can be can be attributable to the Appellant Firm in conduct of business. The Appellant Firm in the return of income filed has claimed the net profit margin at the rate of 0.37% and 0.68% for the 16 and 2016-17 and the average net profit disclosed by the Appellant Firm for all the years under consideration is worked out to be at 0.73%. 7.5.19 At this juncture it is significant to bring it on record in such circumstances that my predecessor in the case of the A case vide Appellate Order in ITA No. 669/2021 the AY 2013-14 where the facts and circumstances were similar, has held that 30% of the turnover can be the appropriate income of the Appellant Firm. The said order was ta Chennai both by the assessee and the revenue. The Hon’ble ITAT, Chennai vide its order in ITA Nos 366/Chny/2023 dated 09.08.2023 has upheld the decision of my predecessor in rejecting the books of accounts and restricted the estimating the same while determining the total business income of the Appellant’s Firm. ….. 7.5.22 The undersigned to have the judicial discipline, by respectfully following the decision of the Hon’ble ITAT Chennai in the Appellant’s own case for the AY 2013 taken @ 2.21% on the sales turnover in determ income of the Appellant Firm for the years under consideration. Accordingly, the income ( Net Profit ) of the Appellant @ 2.21% for each assessment year under consideration. 7.5.23 Further the AO while determining the taxable income of the Appellant is directed to consider the commission receipts assessment year 2015 grounds raised upon these issues are treated 4. Aggrieved by the Ld. CIT(A)’s order, both the assessee and Revenue are in now in appeal before us. 5. Assailing the action of the Ld. CIT(A), the Ld. CIT DR primarily reiterated the findings of the AO. He submitted that, the search enquiries had revealed that the assessee w one set of accounts reflecting the actual receipts ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 7 :: and the average net profit disclosed by the Appellant Firm for all the years under consideration is worked out to be at 0.73%. At this juncture it is significant to bring it on record in such circumstances that my predecessor in the case of the Appellant’s own case vide Appellate Order in ITA No. 669/2021-22 dated 27.02.2023 for 14 where the facts and circumstances were similar, has held that 30% of the turnover can be the appropriate income of the Appellant Firm. The said order was taken up before the Hon’ble ITAT Chennai both by the assessee and the revenue. The Hon’ble ITAT, Chennai vide its order in ITA Nos 366/Chny/2023 dated 09.08.2023 has upheld the decision of my predecessor in rejecting the books of accounts and restricted the net profit ratio @ 2.21% on sales turnover for estimating the same while determining the total business income of the The undersigned to have the judicial discipline, by respectfully following the decision of the Hon’ble ITAT Chennai in the Appellant’s own case for the AY 2013-14, the net profit ratio of the Appellant Firm is taken @ 2.21% on the sales turnover in determining the business income of the Appellant Firm for the years under consideration. Accordingly, the AO is hereby directed to compute the business income ( Net Profit ) of the Appellant @ 2.21% of the turnover for each assessment year under consideration. Further the AO while determining the taxable income of the Appellant is directed to consider the interest receipts and commission receipts credited to the P&L account separately assessment year 2015-16 and 2016-17 respectively. Thus, the va grounds raised upon these issues are treated partly allowed. Aggrieved by the Ld. CIT(A)’s order, both the assessee and Revenue are in now in appeal before us. Assailing the action of the Ld. CIT(A), the Ld. CIT DR primarily dings of the AO. He submitted that, the search enquiries had revealed that the assessee was maintaining parallel sets of accounts, one set of accounts reflecting the actual receipts & expenses and another 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. and the average net profit disclosed by the Appellant Firm for all the At this juncture it is significant to bring it on record in such ppellant’s own 22 dated 27.02.2023 for 14 where the facts and circumstances were similar, has held that 30% of the turnover can be the appropriate income of the ken up before the Hon’ble ITAT Chennai both by the assessee and the revenue. The Hon’ble ITAT, Chennai vide its order in ITA Nos 366/Chny/2023 dated 09.08.2023 has upheld the decision of my predecessor in rejecting the books of accounts net profit ratio @ 2.21% on sales turnover for estimating the same while determining the total business income of the The undersigned to have the judicial discipline, by respectfully following the decision of the Hon’ble ITAT Chennai in the Appellant’s own 14, the net profit ratio of the Appellant Firm is ining the business income of the Appellant Firm for the years under consideration. AO is hereby directed to compute the business of the turnover Further the AO while determining the taxable income of the interest receipts and separately for each 17 respectively. Thus, the various partly allowed.” Aggrieved by the Ld. CIT(A)’s order, both the assessee and Assailing the action of the Ld. CIT(A), the Ld. CIT DR primarily dings of the AO. He submitted that, the search enquiries as maintaining parallel sets of accounts, expenses and another set of accounts maintained for tax purpose expenditure booked in than the original set of accounts resulting in the net profit contended that, by inflating expenses, the assessee was generating unaccounted funds which were used for property purchases. He pointed out that, the assessee was unable to furnish supportings for these expenses and therefore the AO rightly held that these expenses were not genuine. He therefore supported th action of not rejecting the books of accounts but making separate additions based on inflation of expenses, He further submitted that, if the Ld. CIT(A)’s action of rejecting the books of accounts is upheld, then the the profitability of another assessee, M/s which according to AO, was comparable to the assessee. The Ld. CIT, DR further argued that, the Ld. CIT( ought to still have adjudicated the merits of the disallowance of expenses, which according to him, was made on different footings. Overall therefore he prayed that the order of Ld. CIT(A) be reversed and the AO’s restored. The Ld. CIT, DR also furnished a written synopsis of his arguments, which has been taken on record. 6. Per contra the Ld. AR for the assessee supported the order of Ld. CIT(A). He submitted that, the Ld. CIT(A) had followed ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 8 :: set of accounts maintained for tax purpose. According to Ld. CIT, DR the accounts maintained for tax purposes was higher original set of accounts resulting in the net profit to be lower. He contended that, by inflating expenses, the assessee was generating hich were used for on-money payments . He pointed out that, the assessee was unable to for these expenses and therefore the AO rightly held that these expenses were not genuine. He therefore supported th action of not rejecting the books of accounts but making separate additions based on inflation of expenses, on the basis of seized material He further submitted that, if the Ld. CIT(A)’s action of rejecting the books of accounts is upheld, then the profits ought to be estimated at 53% the profitability of another assessee, M/s Industrial Minerals Company, which according to AO, was comparable to the assessee. The Ld. CIT, DR further argued that, the Ld. CIT(A) having rejected the books of accounts, ought to still have adjudicated the merits of the disallowance of expenses, which according to him, was made on different footings. Overall therefore he prayed that the order of Ld. CIT(A) be reversed and the AO’s restored. The Ld. CIT, DR also furnished a written synopsis of his arguments, which has been taken on record. Per contra the Ld. AR for the assessee supported the order of Ld. CIT(A). He submitted that, the Ld. CIT(A) had followed 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. ng to Ld. CIT, DR the accounts maintained for tax purposes was higher to be lower. He contended that, by inflating expenses, the assessee was generating payments in relation to . He pointed out that, the assessee was unable to for these expenses and therefore the AO rightly held that these expenses were not genuine. He therefore supported the AO’s action of not rejecting the books of accounts but making separate on the basis of seized material. He further submitted that, if the Ld. CIT(A)’s action of rejecting the books profits ought to be estimated at 53% viz., Industrial Minerals Company, which according to AO, was comparable to the assessee. The Ld. CIT, DR A) having rejected the books of accounts, ought to still have adjudicated the merits of the disallowance of expenses, which according to him, was made on different footings. Overall therefore he prayed that the order of Ld. CIT(A) be reversed and the AO’s order be restored. The Ld. CIT, DR also furnished a written synopsis of his Per contra the Ld. AR for the assessee supported the order of Ld. CIT(A). He submitted that, the Ld. CIT(A) had followed the decision rendered by this Tribunal in assessee’s own case in 366/CHNY/2023 for earlier AY 2013 the Ld. CIT(A) estimating the profits at 2.21% be upheld. The Ld. AR also filed a written note rebutting the arguments raise this written note, the assessee has separately objected to the validity of the income-tax assessment framed u/s 153A of the Act on the ground that there was no incriminating material unearthed in the course of search. 7. We have heard both the parties, perused the findings of the CIT(A)/AO; and considered the material placed before us. As noted earlier, search was conducted u/s 132 of the Act upon the assessee on 25.10.2018, pursuant to which the AO had reopened income assessments for AYs 2013 dispute that, the assessee was maintaining two sets of books of accounts, which was found in the course of search and also affirmed by the accounts manager in his statement recorded u/s 13 According to the Revenue, the receipts and expenses maintained in tally data titled ‘ori’ was the actual results of the assessee and that the accounts maintained under title ‘ arrive at suppressed pro assessee however, the tally data titled ‘ incomplete data whereas the tally data ‘ ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 9 :: rendered by this Tribunal in assessee’s own case in for earlier AY 2013-14 and therefore urged that order of the Ld. CIT(A) estimating the profits at 2.21% be upheld. The Ld. AR also filed a written note rebutting the arguments raised by the Ld. CIT, DR. In this written note, the assessee has separately objected to the validity of tax assessment framed u/s 153A of the Act on the ground that there was no incriminating material unearthed in the course of eard both the parties, perused the findings of the and considered the material placed before us. As noted earlier, search was conducted u/s 132 of the Act upon the assessee on 25.10.2018, pursuant to which the AO had reopened income sments for AYs 2013-14 to 2018-19 u/s 153A of the Act. It is not in dispute that, the assessee was maintaining two sets of books of accounts, which was found in the course of search and also affirmed by the accounts manager in his statement recorded u/s 132(4) of the Act. According to the Revenue, the receipts and expenses maintained in tally was the actual results of the assessee and that the accounts maintained under title ‘IT’ was where expenses were inflated to arrive at suppressed profits for income-tax purposes. According to assessee however, the tally data titled ‘ori’ contained unaudited, incomplete data whereas the tally data ‘IT’ was finalized on the basis of 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. rendered by this Tribunal in assessee’s own case in ITA No. 14 and therefore urged that order of the Ld. CIT(A) estimating the profits at 2.21% be upheld. The Ld. AR also d by the Ld. CIT, DR. In this written note, the assessee has separately objected to the validity of tax assessment framed u/s 153A of the Act on the ground that there was no incriminating material unearthed in the course of eard both the parties, perused the findings of the Ld and considered the material placed before us. As noted earlier, search was conducted u/s 132 of the Act upon the assessee on 25.10.2018, pursuant to which the AO had reopened income-tax 19 u/s 153A of the Act. It is not in dispute that, the assessee was maintaining two sets of books of accounts, which was found in the course of search and also affirmed by the 2(4) of the Act. According to the Revenue, the receipts and expenses maintained in tally was the actual results of the assessee and that the ’ was where expenses were inflated to tax purposes. According to ’ contained unaudited, ’ was finalized on the basis of complete audited data gathered from all locations/sites of the assessee. The fact however remains that, there were two parallel sets of books of accounts being maintained by the assessee which was unearthed in course of search and which suggested discrepancies and also raised prima facie doubt regarding correctness of the book us therefore, these seized electronic material coupled with the statement given by the accounts manager u/s 132(4) of the Act constituted incriminating material unearthed in the course of search and hence the preliminary plea of the assessee objecting to the validity of jurisdiction assumed by the AO u/s 153A of the Act for want of incriminating material, is hereby rejected. 8. Coming to the merits of the case, it is noted that, the issue impugned in these cross rendered by the coordinate bench of this Tribunal in assessee’s own case for AY 2013-14 in ITA No. 366/Chny/2023, which was the first AY of the block period, wherein it was held as under: “14. Having heard the rival contentions, carefully considered the submissions, and perused the material placed on record. The case of the assessee firm for the Ay 2013 143(3) vide order dated 08.03.2016, thereafter upon a s 132 of the Act on BMC Group on 25.10.2018 the same was reassessed u/s 143(3) rws 153A bide order dated 26.08.2021. During the course of search, it was found that the assessee firm was maintaining parallel sets of accounts. Evidences were g disks, laptops. Loose sheets pertaining to unaccounted receipts/ payments, deposition of key persons etc. Statement of Shri P Senthil ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 10 :: complete audited data gathered from all locations/sites of the assessee. The fact however remains that, there were two parallel sets of books of accounts being maintained by the assessee which was unearthed in course of search and which suggested discrepancies and also raised prima facie doubt regarding correctness of the books of accounts. us therefore, these seized electronic material coupled with the statement given by the accounts manager u/s 132(4) of the Act constituted incriminating material unearthed in the course of search and ary plea of the assessee objecting to the validity of jurisdiction assumed by the AO u/s 153A of the Act for want of incriminating material, is hereby rejected. Coming to the merits of the case, it is noted that, the issue impugned in these cross-appeals are squarely covered by the decision rendered by the coordinate bench of this Tribunal in assessee’s own case 14 in ITA No. 366/Chny/2023, which was the first AY of the block period, wherein it was held as under:- Having heard the rival contentions, carefully considered the submissions, and perused the material placed on record. The case of the assessee firm for the Ay 2013-14 was assessed by the department u/s 143(3) vide order dated 08.03.2016, thereafter upon a search action u/s 132 of the Act on BMC Group on 25.10.2018 the same was reassessed u/s 143(3) rws 153A bide order dated 26.08.2021. During the course of search, it was found that the assessee firm was maintaining parallel sets of accounts. Evidences were gathered by the search team in the form disks, laptops. Loose sheets pertaining to unaccounted receipts/ payments, deposition of key persons etc. Statement of Shri P Senthil 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. complete audited data gathered from all locations/sites of the assessee. The fact however remains that, there were two parallel sets of books of accounts being maintained by the assessee which was unearthed in course of search and which suggested discrepancies and also raised prima s of accounts. According to us therefore, these seized electronic material coupled with the statement given by the accounts manager u/s 132(4) of the Act, over-all, constituted incriminating material unearthed in the course of search and ary plea of the assessee objecting to the validity of jurisdiction assumed by the AO u/s 153A of the Act for want of Coming to the merits of the case, it is noted that, the issue ls are squarely covered by the decision rendered by the coordinate bench of this Tribunal in assessee’s own case 14 in ITA No. 366/Chny/2023, which was the first AY of the Having heard the rival contentions, carefully considered the submissions, and perused the material placed on record. The case of the 14 was assessed by the department u/s earch action u/s 132 of the Act on BMC Group on 25.10.2018 the same was reassessed u/s 143(3) rws 153A bide order dated 26.08.2021. During the course of search, it was found that the assessee firm was maintaining parallel sets athered by the search team in the form disks, laptops. Loose sheets pertaining to unaccounted receipts/ payments, deposition of key persons etc. Statement of Shri P Senthil Muthu Kumar, Accounts Manager of the assessee firm were taken, according to the sai assessee firm was scripted by the Ld AO. Exhaustive workings a/w screen shots of the ledger accounts were produced in the Assessment Order by the Ld AO and disallowances were made. Aggrieved by the additions, the assessee agitated on the issues before the Ld CIT(A). Ld CIT (A), without touching the merits of individual additions, have observed that the reasons explained by the appellant for the discrepancies that occurred in the books of accounts as identifie AO in the assessment order are reasonable and acceptable having regard to the nature of business, the remote locations where the business operations are carried on, the non accounting staff in such remote locations, multipl companies with similar sounding names and frequent inter company transactions. It is further noticed by the Ld CIT(A) that various discrepancies as have been identified by the AO and the appellant was confronted with the same, the appe discrepancies. However, since the appellant has brought out various constraints in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by stating that it is unable to do so at present in view of the passage of time and frequent changes in the accounting staff working with the appellant. It is considered by the Ld CIT(A) that the said submission of the appellant cannot be disregarded in view of the genuineness of difficulties expressed by the appellant. At the same time, it is not possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are subjected to necessary reconciliati the following observations: 43. In this context, it is pertinent to observe that this is not a case where the appellant is attempting to give incorrect reasons for its inability to produce the supporting bills and vouc the appellant for the instant Assessment Year was subjected to regular scrutiny assessment u/s 143(3) vide order dated 08.03.2016. As evident from the contents of the said Assessment Order, the AD required the appellant to produce the bil vouchers in support of the expenditure debited towards mining production and processing and other expenses during the course of the said Assessment proceedings. The appellant produced the supporting bills and vouchers before the AO in response to th same. The AO stated in the Assessment Order that he carried out the verification of the said bills a vouchers and he found that the vouchers to the extent of Rs.2.80 Crores were beyond proper verification and that the claim of the appellant to the said e was not fully proved. The AD therefore made disallowance of ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 11 :: Muthu Kumar, Accounts Manager of the assessee firm were taken, according to the said statements Modus Operandi of accounting of the assessee firm was scripted by the Ld AO. Exhaustive workings a/w screen shots of the ledger accounts were produced in the Assessment Order by the Ld AO and disallowances were made. Aggrieved by the , the assessee agitated on the issues before the Ld CIT(A). Ld CIT (A), without touching the merits of individual additions, have observed that the reasons explained by the appellant for the discrepancies that occurred in the books of accounts as identifie AO in the assessment order are reasonable and acceptable having regard to the nature of business, the remote locations where the business operations are carried on, the non-availability of skilled accounting staff in such remote locations, multiplicity of group companies with similar sounding names and frequent inter company transactions. It is further noticed by the Ld CIT(A) that various discrepancies as have been identified by the AO and the appellant was confronted with the same, the appellant is required to reconcile the said discrepancies. However, since the appellant has brought out various constraints in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by stating that it ble to do so at present in view of the passage of time and frequent changes in the accounting staff working with the appellant. It is considered by the Ld CIT(A) that the said submission of the appellant cannot be disregarded in view of the genuineness of difficulties expressed by the appellant. At the same time, it is not possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are subjected to necessary reconciliation. Ld CIT(A) decided the appeal with the following observations: 43. In this context, it is pertinent to observe that this is not a case where the appellant is attempting to give incorrect reasons for its inability to produce the supporting bills and vouchers. The case of the appellant for the instant Assessment Year was subjected to regular scrutiny assessment u/s 143(3) vide order dated 08.03.2016. As evident from the contents of the said Assessment Order, the AD required the appellant to produce the bil vouchers in support of the expenditure debited towards mining production and processing and other expenses during the course of the said Assessment proceedings. The appellant produced the supporting bills and vouchers before the AO in response to th same. The AO stated in the Assessment Order that he carried out the verification of the said bills a vouchers and he found that the vouchers to the extent of Rs.2.80 Crores were beyond proper verification and that the claim of the appellant to the said e was not fully proved. The AD therefore made disallowance of 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. Muthu Kumar, Accounts Manager of the assessee firm were taken, d statements Modus Operandi of accounting of the assessee firm was scripted by the Ld AO. Exhaustive workings a/w screen shots of the ledger accounts were produced in the Assessment Order by the Ld AO and disallowances were made. Aggrieved by the , the assessee agitated on the issues before the Ld CIT(A). Ld CIT (A), without touching the merits of individual additions, have observed that the reasons explained by the appellant for the discrepancies that occurred in the books of accounts as identified by the AO in the assessment order are reasonable and acceptable having regard to the nature of business, the remote locations where the availability of skilled icity of group companies with similar sounding names and frequent inter-group company transactions. It is further noticed by the Ld CIT(A) that various discrepancies as have been identified by the AO and the appellant was llant is required to reconcile the said discrepancies. However, since the appellant has brought out various constraints in carrying out such reconciliation and furnishing the supporting bills and vouchers in the written submission by stating that it ble to do so at present in view of the passage of time and frequent changes in the accounting staff working with the appellant. It is considered by the Ld CIT(A) that the said submission of the appellant cannot be disregarded in view of the genuineness of the practical difficulties expressed by the appellant. At the same time, it is not possible to accept the correctness of the claims in the books of account unless the discrepancies pointed out in the Assessment Order are on. Ld CIT(A) decided the appeal with 43. In this context, it is pertinent to observe that this is not a case where the appellant is attempting to give incorrect reasons for its hers. The case of the appellant for the instant Assessment Year was subjected to regular scrutiny assessment u/s 143(3) vide order dated 08.03.2016. As evident from the contents of the said Assessment Order, the AD required the appellant to produce the bills and vouchers in support of the expenditure debited towards mining production and processing and other expenses during the course of the said Assessment proceedings. The appellant produced the supporting bills and vouchers before the AO in response to the same. The AO stated in the Assessment Order that he carried out the verification of the said bills a vouchers and he found that the vouchers to the extent of Rs.2.80 Crores were beyond proper verification and that the claim of the appellant to the said extent was not fully proved. The AD therefore made disallowance of production and processing expenses to the tune of Rs.2.80 Crores in the original Assessment Order. The facts narrated in the said Assessment Order clearly bring out the fact that the appella maintained the bills and vouchers in support of the expenditure debited to the P&L Account and that the same were verified by the AO during the original Assessment proceedings. 44. Having regard to the discussion made in the preceding paragraphs, it nee regarding the fact that the books of account of the Appellant for the Assessment Year under consideration are erroneous and inaccurate. Though the appellant is unable to reconcile the discrepancies/ inaccuracies b relevant transactions along with the supporting bills and vouchers, the furnishing of the bills and vouchers and their verification by the AO during the original assessment proceedings cannot be lost sight of. Though cannot be accepted in toto in the face of the discrepancies brought out by the AD in the impugned Assessment Order, making disallowance of the entire expenditure in respect of which such discrepancies wa the case keeping in view the verification made during the original Assessment proceedings. On making disallowance of entire expenditure in respect of which the discrepancies wars found as sought to be done the total income of the appellant was assessed at Rs.104.73 Crores as against the sales turnover of Rs.183.35 Crores. The said assessment has resulted in impliedly considering the net profit of the appellant at business. The said abnormality in the profit margin itself is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from wrong claims of 45. In view of the said reasons, it is considered that the books of accounts of the appellant, which are inaccurate, do not facilitate arriving at true and correct profits of the appellant and they are required to be rejected 145(3) of the Act. It is held that the business income of the appellant is required to be estimated under the said provisions, consequent to rejection of the books of account. 46. For the purpose of estimating the bus considered that the business income admitted by the appellant itself in its return of income for AY 2011 exemption of the said income u/s.108 of the Act constitutes a fair, ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 12 :: production and processing expenses to the tune of Rs.2.80 Crores in the original Assessment Order. The facts narrated in the said Assessment Order clearly bring out the fact that the appella maintained the bills and vouchers in support of the expenditure debited to the P&L Account and that the same were verified by the AO during the original Assessment proceedings. 44. Having regard to the discussion made in the preceding paragraphs, it needs to be observed that there is no dispute regarding the fact that the books of account of the Appellant for the Assessment Year under consideration are erroneous and inaccurate. Though the appellant is unable to reconcile the discrepancies/ inaccuracies by furnishing the correct details of the relevant transactions along with the supporting bills and vouchers, the furnishing of the bills and vouchers and their verification by the AO during the original assessment proceedings cannot be lost sight the claims of the appellant in the books of account cannot be accepted in toto in the face of the discrepancies brought out by the AD in the impugned Assessment Order, making disallowance of the entire expenditure in respect of which such discrepancies ware noticed is also not appropriate in the facts of the case keeping in view the verification made during the original Assessment proceedings. On making disallowance of entire expenditure in respect of which the discrepancies wars found as sought to be done by the AO in the impugned Assessment Order, the total income of the appellant was assessed at Rs.104.73 Crores as against the sales turnover of Rs.183.35 Crores. The said assessment has resulted in impliedly considering the net profit of the appellant at 57.12%, which is abnormally high in any line of business. The said abnormality in the profit margin itself is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from wrong claims of expenditure by the appellant. 45. In view of the said reasons, it is considered that the books of accounts of the appellant, which are inaccurate, do not facilitate arriving at true and correct profits of the appellant and they are required to be rejected by invoking the provisions of Section 145(3) of the Act. It is held that the business income of the appellant is required to be estimated under the said provisions, consequent to rejection of the books of account. 46. For the purpose of estimating the business income, it is considered that the business income admitted by the appellant itself in its return of income for AY 2011-12 before claiming exemption of the said income u/s.108 of the Act constitutes a fair, 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. production and processing expenses to the tune of Rs.2.80 Crores in the original Assessment Order. The facts narrated in the said Assessment Order clearly bring out the fact that the appellant maintained the bills and vouchers in support of the expenditure debited to the P&L Account and that the same were verified by the 44. Having regard to the discussion made in the preceding ds to be observed that there is no dispute regarding the fact that the books of account of the Appellant for the Assessment Year under consideration are erroneous and inaccurate. Though the appellant is unable to reconcile the y furnishing the correct details of the relevant transactions along with the supporting bills and vouchers, the furnishing of the bills and vouchers and their verification by the AO during the original assessment proceedings cannot be lost sight the claims of the appellant in the books of account cannot be accepted in toto in the face of the discrepancies brought out by the AD in the impugned Assessment Order, making disallowance of the entire expenditure in respect of which such re noticed is also not appropriate in the facts of the case keeping in view the verification made during the original Assessment proceedings. On making disallowance of entire expenditure in respect of which the discrepancies wars found as by the AO in the impugned Assessment Order, the total income of the appellant was assessed at Rs.104.73 Crores as against the sales turnover of Rs.183.35 Crores. The said assessment has resulted in impliedly considering the net profit of 57.12%, which is abnormally high in any line of business. The said abnormality in the profit margin itself is indicative of the fact that the discrepancies in the accounts pointed out by the AO cannot be considered to be arising wholly from 45. In view of the said reasons, it is considered that the books of accounts of the appellant, which are inaccurate, do not facilitate arriving at true and correct profits of the appellant and they are by invoking the provisions of Section 145(3) of the Act. It is held that the business income of the appellant is required to be estimated under the said provisions, iness income, it is considered that the business income admitted by the appellant 12 before claiming exemption of the said income u/s.108 of the Act constitutes a fair, logical and reasonable indicator of true and appellant. Since the appellant claimed exemption u/s.108 in the said Assessment Year, it is reasonable to infer that the business income disclosed in the return of income for the said Assessment Year represents the correct profits o year. The said assessment year is the last year of claiming exemption u/s 108 by the appellant and there is only one intervening year be Veen the said assessment year and the instant assessment year. Having regard to the same, considered view that the net profit margin of 29.77% disclosed by the appellant the said AY 2011 profits of the appellant for the instant assessment year also. Hence, I consider it appropriate to estimate for the instant Assessment Year at 30% of the sales turnover for the purpose of estimating the business income of the appellant. The AO is accordingly directed to determine the business income of the appellant at 30% of the sales turn Since the business income is being determined on estimate basis, it is held that the individual additions made to the income in the original Assessment Order dated 08.03.2016 get subsumed in the said estimated business income and t considered separately. The AO is directed to consider the interest receipts of Rs.14,11,587/ Rs.6,91,482/ the estimated business income while determin The relevant grounds of appeal arc therefore partly allowed.\" 15. On perusal of the aforesaid observation of the Ld CIT(A), it is evident that the case of the assessee was subjected to assessment for the instant year under section 143 necessary vouchers documents and submissions pertaining to expenditure debited towards mining, production and processing and other expenses during the course of the said Assessment proceedings were submitted by the assessee evidence were duly verified by the AO, thus have made a disallowance of Rs. 2.80 Crore under the head production and processing expenses in the original Assessment Order. It is therefore well established that the appellant had maintained the bills and vouchers in support of the expenditure debited to the P & L Account and that the same were verified by the AO during the original Assessment proceedings. It is further observed by the Ld CIT(A) that in spite of the fact that the assessee was unable to reconcile the discrepancies/ inaccuracies by furnishing the correct details of relevant transactions along with the supporting bills and vouchers, no dispute with regard to books of accounts maintained by the assessee were noticed by such a situation, considering the additions made by Ld AO the total ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 13 :: logical and reasonable indicator of true and correct profits of the appellant. Since the appellant claimed exemption u/s.108 in the said Assessment Year, it is reasonable to infer that the business income disclosed in the return of income for the said Assessment Year represents the correct profits of the appellant for the said year. The said assessment year is the last year of claiming exemption u/s 108 by the appellant and there is only one intervening year be Veen the said assessment year and the instant assessment year. Having regard to the same, I am of the considered view that the net profit margin of 29.77% disclosed by the appellant the said AY 2011-12 is a reliable indicator of the true profits of the appellant for the instant assessment year also. Hence, I consider it appropriate to estimate the net profit margin for the instant Assessment Year at 30% of the sales turnover for the purpose of estimating the business income of the appellant. The AO is accordingly directed to determine the business income of the appellant at 30% of the sales turnover of Rs.183.35 gores. Since the business income is being determined on estimate basis, it is held that the individual additions made to the income in the original Assessment Order dated 08.03.2016 get subsumed in the said estimated business income and the same not required to be considered separately. The AO is directed to consider the interest receipts of Rs.14,11,587/- and commission receipts of Rs.6,91,482/- credited to the P&L account separately apart from the estimated business income while determining the total income. The relevant grounds of appeal arc therefore partly allowed.\" On perusal of the aforesaid observation of the Ld CIT(A), it is evident that the case of the assessee was subjected to assessment for the instant year under section 143(3) of the act and that all the necessary vouchers documents and submissions pertaining to expenditure debited towards mining, production and processing and other expenses during the course of the said Assessment proceedings were submitted by the assessee as required by the Ld AO. Such evidence were duly verified by the AO, thus have made a disallowance of Rs. 2.80 Crore under the head production and processing expenses in the original Assessment Order. It is therefore well established that the d maintained the bills and vouchers in support of the expenditure debited to the P & L Account and that the same were verified by the AO during the original Assessment proceedings. It is further observed by the Ld CIT(A) that in spite of the fact that the assessee was unable to reconcile the discrepancies/ inaccuracies by furnishing the correct details of relevant transactions along with the supporting bills and vouchers, no dispute with regard to books of accounts maintained by the assessee were noticed by the Ld AO. In such a situation, considering the additions made by Ld AO the total 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. correct profits of the appellant. Since the appellant claimed exemption u/s.108 in the said Assessment Year, it is reasonable to infer that the business income disclosed in the return of income for the said Assessment f the appellant for the said year. The said assessment year is the last year of claiming exemption u/s 108 by the appellant and there is only one intervening year be Veen the said assessment year and the instant I am of the considered view that the net profit margin of 29.77% disclosed by 12 is a reliable indicator of the true profits of the appellant for the instant assessment year also. the net profit margin for the instant Assessment Year at 30% of the sales turnover for the purpose of estimating the business income of the appellant. The AO is accordingly directed to determine the business income of over of Rs.183.35 gores. Since the business income is being determined on estimate basis, it is held that the individual additions made to the income in the original Assessment Order dated 08.03.2016 get subsumed in the he same not required to be considered separately. The AO is directed to consider the interest and commission receipts of credited to the P&L account separately apart from ing the total income. The relevant grounds of appeal arc therefore partly allowed.\" On perusal of the aforesaid observation of the Ld CIT(A), it is evident that the case of the assessee was subjected to assessment for (3) of the act and that all the necessary vouchers documents and submissions pertaining to expenditure debited towards mining, production and processing and other expenses during the course of the said Assessment proceedings as required by the Ld AO. Such evidence were duly verified by the AO, thus have made a disallowance of Rs. 2.80 Crore under the head production and processing expenses in the original Assessment Order. It is therefore well established that the d maintained the bills and vouchers in support of the expenditure debited to the P & L Account and that the same were verified by the AO during the original Assessment proceedings. It is further observed by the Ld CIT(A) that in spite of the fact that the assessee was unable to reconcile the discrepancies/ inaccuracies by furnishing the correct details of relevant transactions along with the supporting bills and vouchers, no dispute with regard to books of the Ld AO. In such a situation, considering the additions made by Ld AO the total assessed income of the assessee was computed at Rs. 104.73/ whereas the total sales turnover, which was untouched and remain undisputed was Rs. 183.25 Crores, thus was arrived at 57.12%, this % was considered as absolutely abnormal and high by the Ld CIT(A). Ld CIT(A) has very rightly commented that such a huge profit margin is abnormally high in any line of business and thus indicative that the discrepancies pointed out in the accounts by the Ld AO cannot be considered to be arising wholly from the wrong claims of expenditure by the assessee/appellant. Ld CIT(A) thus after considering the books of accounts of the assessee firm, as inaccu which do not facilitate to arrive at true and correct profit of the appellant have rejected the same by invoking the provisions of section 145(3) of the Act. Under the facts of the present case, we approve the observation of Ld CIT(A) relating to reje the same. Ld CIT(A) consequently, estimated the profit of the firm @30% of the sale turnover, the basis for 30% was returned income of AY 2011-12, wherein the assessee has earned a profit of 29.77% before claiming exemption u/s 10B of the Act. On perusal of the order of Ld CIT(A), it is not transpired that while estimating the profit taking the base year as AY 2011 confronted to the assessee firm or not to submit their objectio confirmation on the same. However, to demonstrate the actual ratio of profit and its comparability with the year under consideration (FY 2012 13, AY2013-14), Ld AR of the assessee firm had submitted a chart of production for the financial years 2010 extracted as under: BEACH MINERALS COMPANY Financial Year Garnet Qty Value 2010-11 24500 158152677 2011-12 57856 408896991 2012-13 84091 837603370 2013-14 55288 659312080 2014-15 52550 504126598 2015-16 43000 374261914 2016-17 3312 28831737 ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 14 :: assessed income of the assessee was computed at Rs. 104.73/ whereas the total sales turnover, which was untouched and remain undisputed was Rs. 183.25 Crores, thus the resultant % of Net Profit was arrived at 57.12%, this % was considered as absolutely abnormal and high by the Ld CIT(A). Ld CIT(A) has very rightly commented that such a huge profit margin is abnormally high in any line of business and that the discrepancies pointed out in the accounts by the Ld AO cannot be considered to be arising wholly from the wrong claims of expenditure by the assessee/appellant. Ld CIT(A) thus after considering the books of accounts of the assessee firm, as inaccu which do not facilitate to arrive at true and correct profit of the appellant have rejected the same by invoking the provisions of section 145(3) of the Act. Under the facts of the present case, we approve the observation of Ld CIT(A) relating to rejection of the books of assessee and uphold the same. Ld CIT(A) consequently, estimated the profit of the firm @30% of the sale turnover, the basis for 30% was returned income of 12, wherein the assessee has earned a profit of 29.77% before exemption u/s 10B of the Act. On perusal of the order of Ld CIT(A), it is not transpired that while estimating the profit taking the base year as AY 2011-12 (FY 2010-11), whether this fact was confronted to the assessee firm or not to submit their objectio confirmation on the same. However, to demonstrate the actual ratio of profit and its comparability with the year under consideration (FY 2012 14), Ld AR of the assessee firm had submitted a chart of production for the financial years 2010-11 to 2016-17, the same extracted as under:- BEACH MINERALS COMPANY June 2023 ilmenite Total Value Qty Value Qty 158152677 0 0 24500 408896991 23184 332034863 81040 837603370 60190 995980129 144281 659312080 40992 514625364 96280 504126598 41500 518636498 94050 374261914 19800 247445847 62800 28831737 12600 157465539 15912 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. assessed income of the assessee was computed at Rs. 104.73/- Crores, whereas the total sales turnover, which was untouched and remain the resultant % of Net Profit was arrived at 57.12%, this % was considered as absolutely abnormal and high by the Ld CIT(A). Ld CIT(A) has very rightly commented that such a huge profit margin is abnormally high in any line of business and that the discrepancies pointed out in the accounts by the Ld AO cannot be considered to be arising wholly from the wrong claims of expenditure by the assessee/appellant. Ld CIT(A) thus after considering the books of accounts of the assessee firm, as inaccurate which do not facilitate to arrive at true and correct profit of the appellant have rejected the same by invoking the provisions of section 145(3) of the Act. Under the facts of the present case, we approve the observation ction of the books of assessee and uphold the same. Ld CIT(A) consequently, estimated the profit of the firm @30% of the sale turnover, the basis for 30% was returned income of 12, wherein the assessee has earned a profit of 29.77% before exemption u/s 10B of the Act. On perusal of the order of Ld CIT(A), it is not transpired that while estimating the profit taking the 11), whether this fact was confronted to the assessee firm or not to submit their objections or confirmation on the same. However, to demonstrate the actual ratio of profit and its comparability with the year under consideration (FY 2012- 14), Ld AR of the assessee firm had submitted a chart of 17, the same June 2023 Total Value 24500 158,152,677 81040 740,931,854 144281 1,833,583,499 96280 1,173,937,444 94050 1,022,763,096 62800 621,707,761 15912 186,297,276 16. On perusal of the aforesaid chart, it is evident that the ratio of profit for the AY 2011 with the relevant AY 2013 was a mismatch in the production mix (quantity of minerals extracted) for the FY 2010- \"O\"(zero) in the base years as compared to 60190 units in the relevant year. It is the submission of Led AR tha different minerals extracted by the firm. When the basis for reasonableness i.e. the profit of the AY 2011 as reliable indicator by the Ld CIT(A) itself is incomparable for the reason that the production mix for the base year is different than that of the years under consideration. Now the question arises is that, what is the reasonable and correct ratio, which should be applied while estimating the profit when books of accounts are rejected. In thoughtful consideration, we find it to be most suitable and reasonable to apply the average profits earned by the assessee itself in the comparable years under which the business activities of the assessee firm were identical. We, therefore, are of t average percentage of profit for the FY 2011 2012-13) which comes to 0.57% (average of 0.91+0.09+0.37+0.68+0.81) shall be the most reasonable percentage of profit to be applied on the sales turnover of th 14. However, since the assessment u/s 143(3), wherein certain additions were made, resulting the profit of the assessee assessed at Rs. 4.04 crore i.e. 2.21% of total sales turnover of Rs. 183.35 Crores. We find it appropriate to app the assessee firm to estimate its net profit margin from business of assessee for the AY 2013 added separately as directed by the order of Ld CIT(A). 17. In terms of our aforesaid observations, we find no infirmity in the order of Ld CIT(A) apart from rate of profit adopted for estimation of net profit margin while rejecting books of accounts u/s 145(3) of the Act, thus, we modify the order of Ld CIT(A) by percentage of net profit margin to 2.21% on sales turnover for estimating the same while determining the total assessable income. Ld AO is directed to work out the estimated income from business accordingly. In the result appeal of the ass 9. It is noted that, the facts and circumstances involved in the above AY 2013-14 is similar to the AYs 2015 ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 15 :: On perusal of the aforesaid chart, it is evident that the ratio of profit for the AY 2011-12 (FY 2010-11/base year) is not comparable with the relevant AY 2013-14 (FY 2012-13/relevant year), since was a mismatch in the production mix (quantity of minerals extracted) -11 and FY 2012-13, wherein quantity of \"ilmenite\" is \"O\"(zero) in the base years as compared to 60190 units in the relevant year. It is the submission of Led AR that the rate of profit is different for different minerals extracted by the firm. When the basis for reasonableness i.e. the profit of the AY 2011-12, which was considered as reliable indicator by the Ld CIT(A) itself is incomparable for the production mix for the base year is different than that of the years under consideration. Now the question arises is that, what is the reasonable and correct ratio, which should be applied while estimating the profit when books of accounts are rejected. In thoughtful consideration, we find it to be most suitable and reasonable to apply the average profits earned by the assessee itself in the comparable years under which the business activities of the assessee firm were identical. We, therefore, are of the considered opinion that average percentage of profit for the FY 2011-12 to 2016-17 (except FY 13) which comes to 0.57% (average of 0.91+0.09+0.37+0.68+0.81) shall be the most reasonable percentage of profit to be applied on the sales turnover of the assessee for AY 2013 14. However, since the assessment u/s 143(3), wherein certain additions were made, resulting the profit of the assessee assessed at Rs. 4.04 crore i.e. 2.21% of total sales turnover of Rs. 183.35 Crores. We find it appropriate to apply the rate of 2.21% on the sales turnover of the assessee firm to estimate its net profit margin from business of assessee for the AY 2013-14. Income from Interest and commission to added separately as directed by the order of Ld CIT(A). In terms of our aforesaid observations, we find no infirmity in the order of Ld CIT(A) apart from rate of profit adopted for estimation of net profit margin while rejecting books of accounts u/s 145(3) of the Act, thus, we modify the order of Ld CIT(A) by scaling down the percentage of net profit margin to 2.21% on sales turnover for estimating the same while determining the total assessable income. Ld AO is directed to work out the estimated income from business accordingly. In the result appeal of the assessee is partly allowed.” It is noted that, the facts and circumstances involved in the above 14 is similar to the AYs 2015-16 & 2016-17 impugned before us. 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. On perusal of the aforesaid chart, it is evident that the ratio of 11/base year) is not comparable 13/relevant year), since there was a mismatch in the production mix (quantity of minerals extracted) 13, wherein quantity of \"ilmenite\" is \"O\"(zero) in the base years as compared to 60190 units in the relevant t the rate of profit is different for different minerals extracted by the firm. When the basis for 12, which was considered as reliable indicator by the Ld CIT(A) itself is incomparable for the production mix for the base year is different than that of the years under consideration. Now the question arises is that, what is the reasonable and correct ratio, which should be applied while estimating the profit when books of accounts are rejected. In our thoughtful consideration, we find it to be most suitable and reasonable to apply the average profits earned by the assessee itself in the comparable years under which the business activities of the assessee he considered opinion that 17 (except FY 13) which comes to 0.57% (average of 0.91+0.09+0.37+0.68+0.81) shall be the most reasonable percentage e assessee for AY 2013- 14. However, since the assessment u/s 143(3), wherein certain additions were made, resulting the profit of the assessee assessed at Rs. 4.04 crore i.e. 2.21% of total sales turnover of Rs. 183.35 Crores. We ly the rate of 2.21% on the sales turnover of the assessee firm to estimate its net profit margin from business of 14. Income from Interest and commission to In terms of our aforesaid observations, we find no infirmity in the order of Ld CIT(A) apart from rate of profit adopted for estimation of net profit margin while rejecting books of accounts u/s 145(3) of the scaling down the percentage of net profit margin to 2.21% on sales turnover for estimating the same while determining the total assessable income. Ld AO is directed to work out the estimated income from business essee is partly allowed.” It is noted that, the facts and circumstances involved in the above 17 impugned before us. Accordingly, we do not see any reason to take a different view in the relevant years before us. Likewise, the argument of the Ld. CIT, DR urging that the net profit rate ought to be adopted at 53% instead of 2.21% as estimated by this Tribunal in assessee’s own case for earlier AY 2013-14 cannot be countenanced. Also, we note that, the entity Industrial Mineral Company urged by the Revenue to be comparable to the assessee, was demonstrated before us to be in different line of business and hence, this entity identified by the Revenue is held to be not comparable. 10. The Ld. CIT, DR had books of accounts are rejected, the disallowance of items of expenses ought to be separately adjudicated and decided upon as to whether it is to be separately added to the estimated business income. According to however, once the books of account are rejected by invoking the provisions of section 145 of the Act and the income is estimated to the best of judgment as per the provisions of section 144 of the Act, the said estimate is made in substitution of the b computed in accordance with the provisions contained in sections 30 to 43D as laid down in section 29 of the Act. Consequently, all the deductions which are referred to in sections 30 to 43D of the Act are deemed to have been taken into account while making such an estimate. Useful reference in this regard may be made to ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 16 :: Accordingly, we do not see any reason to take a different view in the ore us. Likewise, the argument of the Ld. CIT, DR urging that the net profit rate ought to be adopted at 53% instead of 2.21% as estimated by this Tribunal in assessee’s own case for earlier AY 14 cannot be countenanced. Also, we note that, the entity Industrial Mineral Company urged by the Revenue to be comparable to the assessee, was demonstrated before us to be in different line of business and hence, this entity identified by the Revenue is held to be not The Ld. CIT, DR had further additionally urged that, even if the books of accounts are rejected, the disallowance of items of expenses ought to be separately adjudicated and decided upon as to whether it is to be separately added to the estimated business income. According to the books of account are rejected by invoking the provisions of section 145 of the Act and the income is estimated to the as per the provisions of section 144 of the Act, the said estimate is made in substitution of the business income that is to be computed in accordance with the provisions contained in sections 30 to 43D as laid down in section 29 of the Act. Consequently, all the deductions which are referred to in sections 30 to 43D of the Act are aken into account while making such an estimate. Useful reference in this regard may be made to the decision of Hon’ble 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. Accordingly, we do not see any reason to take a different view in the ore us. Likewise, the argument of the Ld. CIT, DR urging that the net profit rate ought to be adopted at 53% instead of 2.21% as estimated by this Tribunal in assessee’s own case for earlier AY 14 cannot be countenanced. Also, we note that, the entity viz., Industrial Mineral Company urged by the Revenue to be comparable to the assessee, was demonstrated before us to be in different line of business and hence, this entity identified by the Revenue is held to be not further additionally urged that, even if the books of accounts are rejected, the disallowance of items of expenses ought to be separately adjudicated and decided upon as to whether it is to be separately added to the estimated business income. According to us the books of account are rejected by invoking the provisions of section 145 of the Act and the income is estimated to the as per the provisions of section 144 of the Act, the said usiness income that is to be computed in accordance with the provisions contained in sections 30 to 43D as laid down in section 29 of the Act. Consequently, all the deductions which are referred to in sections 30 to 43D of the Act are aken into account while making such an estimate. the decision of Hon’ble Andhra Pradesh High Court in the case of CIT (232 ITR 776) and Hon’ble Allahabad High Court in the case of vs Banwari Lal Banshidhar (229 ITR 229) not agree with this plea of the Revenue. 11. In light of the above, we do not see any infirmity in the order of the Ld. CIT(A) in rejecting the books of accounts and estimating the total income of the assessee. We accordingly uphold the same. 12. Since, the issue raised by the assessee cross appeals under various grounds have been dealt with in terms of our observations herein above. Contentions if any dealt with become academic and thus not adjudicated separately. 13. Accordingly, having regard to our above findings, all the appeals of the assessee and Revenue stands dismissed. Order pronounced on the Sd/- (जगदीश) (JAGADISH) लेखा सद\f/ACCOUNTANT MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 26th November TLN, Sr.PS ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 17 :: High Court in the case of Indwell Constructions Vs. and Hon’ble Allahabad High Court in the case of vs Banwari Lal Banshidhar (229 ITR 229). For these reasons, we do not agree with this plea of the Revenue. In light of the above, we do not see any infirmity in the order of the Ld. CIT(A) in rejecting the books of accounts and estimating the total come of the assessee. We accordingly uphold the same. Since, the issue raised by the assessee & revenue in captioned cross appeals under various grounds have been dealt with in terms of our observations herein above. Contentions if any, which were not me academic and thus not adjudicated separately. Accordingly, having regard to our above findings, all the appeals of the assessee and Revenue stands dismissed. Order pronounced on the 26th day of November, 2024 Sd/ /ACCOUNTANT MEMBER (एबी टी. (ABY T. VARKEY \u0001याियक सद\bय/JUDICIAL MEMBER November, 2024. 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. Indwell Constructions Vs. and Hon’ble Allahabad High Court in the case of CIT For these reasons, we do In light of the above, we do not see any infirmity in the order of the Ld. CIT(A) in rejecting the books of accounts and estimating the total revenue in captioned cross appeals under various grounds have been dealt with in terms of our which were not argued or me academic and thus not adjudicated separately. Accordingly, having regard to our above findings, all the appeals of 24, in Chennai. Sd/- . वक ) ABY T. VARKEY) /JUDICIAL MEMBER आदेश क\r \u000eितिलिप अ\u0014ेिषत/Copy to 1. अपीलाथ\u0018/Appellant 2. \u0019\u001aथ\u0018/Respondent 3. आयकरआयु\u001f/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0019ितिनिध/DR 5. गाड\u0010फाईल/GF ITA Nos.1465 & 1466/Chny/2023 (AYs 20 CO Nos.33 & 34/Chny/2024 (AYs 20 M/s. Beach Minerals Co. :: 18 :: Copy to: , Chennai / Madurai / Salem / Coimbatore. 2015-16 & 2016-17) 2015-16 & 2016-17) M/s. Beach Minerals Co. , Chennai / Madurai / Salem / Coimbatore. "