Mohammed N Chaudhary, Pune V. Deputy Commissioner of Income-tax, Circle - 8, Pune

ITA 1327/PUN/2018

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9003 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 09-08-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 19-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Principle of natural justice
• Section: 250

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER . आयकर अपीलसं. / ITA No.1327/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2013-14 Mohammad N. Chaudhary, 240, Jadhavwadi Road, Kudalwadi, Chikhali, Pune – 412114. PAN: ACOPN 6082 F Vs The DCIT, Circle-8, Pune. Appellant / Assessee Respondent / Revenue Assessee by None Revenue by Shri S P Walimbe – DR Date of hearing 10/08/2022 Date of pronouncement 03/11/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-6, Pune, dated 18.05.2018 for the A.Y. 2013-14 under section 250 of the Income Tax Act, 1961(in short “the Act”). The Assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case the CIT(A) has erred in estimating the GP at 3.3% as against the GP disclosed at 2.41% and making the addition of Rs.29,70,717 to the returned income. 2. On the facts and in the circumstances of the case the CIT (A) has erred in confirming the order of Assessing Officer who rejected the books of accounts without there being any reason to do so particularly in ITA No.1327/PUN/2018 for A.Y. 2013-14 Mohammed N. Chaudhary (A) 2 the light of fact that appellant clarified all the queries raised by the Assessing Officer and have been found to be satisfactorily clarified. 3. On the facts and in the circumstances of the case and without prejudice to the above the CIT (A) has erred in adopting the GP ratio declared by three other assessee’s carrying on the similar business without confronting and providing the relevant final accounts of those parties in order to verify how far these are comparable instances. Thus the addition is made arbitrarily. 4. The above grounds of appeal may kindly be allowed to be amended, altered or modified etc. in the interest of natural justice.” 2. None appeared on behalf of the assessee. We have heard ld.Departmental Representative(ld.DR) for the Revenue and perused the records. As per assessment order, the assessee was engaged in the business of iron and scrap. 3. There was a survey on 16.02.2015 in the case of M/s.Steel World Company in which assessee is a partner. Assessee is proprietor of Steel India Company. In the proprietary concern, there was negative cash balance of Rs.14,36,58,870/- for F.Y. 2012-13 in the Tally System of Accounting. During the assessment proceedings, the assessee submitted before the Assessing Officer(AO) that there was a fire in the office of the assessee on 17.10.2015, as a result of which, the books, bills, vouchers etc., were destroyed. Therefore, the assessee tried to re-construct the accounts as a result of that the entries in the Tally Software were incomplete. The AO in the assessment order has held as under: ITA No.1327/PUN/2018 for A.Y. 2013-14 Mohammed N. Chaudhary (A) 3 “I have carefully gone through the submissions made by the assesses. Assesses admitted that physical record of the assesses books of accounts as well as the computer consisting our final data were completely destroyed at the time of fire outbreak on 17/10/2015. As result of which the record in Tally Software at the time of your survey was incomplete. Further, assessee had a large number of cash sales transactions for the F. Y. 2012-13. During scrutiny proceedings, assessee could not produce any bills of purchase/sale citing the reason that all the bills were destroyed by fire. Under these circumstances, it is not clear as to how the assessee has generated the entire record and has audited its books of accounts. Assessee’s submission is therefore rejected. Assessee’s gross profit is therefore estimated by considering the average GP of the other assessee’s engaged in similar business and carrying out business in same area. GP ratio of various other businesses for FY 2013-14 are as under: Parshwa Steel Assessed in the jurisdiction of Range-9, Pune 2013-14 1.13% J N Traders Assessee in the jurisdiction of Range-8, Pune 2013-14 4.43% Akthar Chaudhary 2013-14 2.58% Average 3.03% Average GP of various assessees as mentioned above is at 3.03%. On the basis, GP of the assessee firm is estimated @of 3.03% of the turnover of Rs.47,67,11,246/-.” ITA No.1327/PUN/2018 for A.Y. 2013-14 Mohammed N. Chaudhary (A) 4 4. The ld.CIT(A) has confirmed the addition. 5. We have gone through the assessment order. The AO has estimated the Gross Profit at 3.03% whereas Gross Profit shown by assessee was 2.41%. The AO estimated the Gross Profit on the basis of Gross Profit of two other traders which were said to be in the identical business. In the grounds of appeal, the assessee has claimed that AO has not confronted the books of accounts of the traders of whose results AO has relied. It is a fact that the assessee could not produce books of accounts before the AO, therefore, the AO has estimated the Gross Profit at 3.03%. Even before the ld.CIT(A) the assessee could not produce any documents. As mentioned above even before us the assessee has not produced any document. In the facts and circumstances of the case, we are of the opinion that an estimated addition of Rs.25lakhs is appropriate in this case instead of Rs.29,70,717/- made by the AO. Accordingly, the appeal of the assessee is partly allowed. 6. In the result, appeal of the Assessee is Partly Allowed. Order pronounced in the open Court on 3 rd November, 2022. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 3 rd Nov, 2022/ SGR* ITA No.1327/PUN/2018 for A.Y. 2013-14 Mohammed N. Chaudhary (A) 5 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.