Deputy Commissioner of Income Tax, Circle-5(2)(1), Bangalore V. M/s. Vijay Gems & Jewellers, Bangalore

ITA 1393/BANG/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2044 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-01-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT G
• Keywords: Rejection of books of accounts; Unexplained investment; Opportunity of being heard; Set aside
• Section: 143(3); 133A; 153A; 13; 131; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT A NO S. 1335 & 1336/BANG/2017 ASSESSMENT YEAR S : 2012 - 13 & 2013 - 14 M/S. VIJAY GEMS & JEWELLERY, NO.24, 5 TH CROSS, GANDHINAGAR, BANGALORE 560 009. PAN: AAIFV 7294F VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, 5(2)(1), BANGALORE. APPELLANT RESPONDENT IT A NO S. 13 9 3 & 13 94 /BANG/2017 ASSESSMENT YEAR S : 2012 - 13 & 2013 - 14 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5(2)(1), BANGALORE . VS. M/S. VIJAY GEMS & JEWELLERY, NO.24, 5 TH CROSS, GANDHINAGAR, BANGALORE 560 009. PAN: AAIFV 7294F APPELLANT RESPONDENT A SSESSEE BY : SHRI ROHIT G., CA RE V ENUE BY : SH RI PRADEEP KUMAR, C IT(DR )(ITAT ), BENGALURU. DATE OF HEARING : 29 .0 1 .2020 DATE OF PRONOUNCEMENT : 28 . 04 .2020 O R D E R PER B R BASKARAN, ACCOUNTANT MEMBER THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER S PASSED BY LD CIT(A)-5, BENGALURU AND THEY RELATE TO THE ASSESSME NT YEARS 2012-13 AND ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 2 OF 9 2013-14. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. IN BOTH THE YEARS, THE ASSESSING OFFICER ESTIMAT ED THE NET PROFIT OF THE ASSESSEE BY REJECTING BOOKS OF ACCOUNTS. THE L D CIT(A) CONFIRMED THE REJECTION OF BOOKS OF ACCOUNTS IN AY 2013-14, BUT H E HELD THAT THE REJECTION IS NOT JUSTIFIED IN AY 2012-13. HOWEVER, IN BOTH T HE YEARS, THE LD CIT(A) HELD THAT THE AO SHOULD HAVE ESTIMATED THE GROSS P ROFIT ONLY. ACCORDINGLY THE LD CIT(A) ESTIMATED THE GROSS PROFI T IN BOTH THE YEARS AND ALLOWED DEDUCTION OF EXPENSES. THE ORDERS SO PASSE D BY LD CIT(A) GAVE PARTIAL RELIEF TO THE ASSESSEE. HENCE BOTH THE PAR TIES ARE IN APPEAL BEFORE US ASSAILING THE DECISION OF LD CIT(A) ON THE POINT S DECIDED AGAINST EACH OF THEM. 3. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAG ED IN THE BUSINESS OF TRADING IN LOOSE DIAMONDS AND DIAMOND STUDDED JEWEL LERY. THE PARTNERSHIP FIRM WAS FORMED ON 01.04.2011. SO THE FIRST YEAR O F OPERATION OF THE ASSESSEE IS AY 2012-13. 4. A SEARCH OPERATION U/S 132 OF THE ACT WAS CONDUC TED IN THE HANDS OF THE ASSESSEE 20-04-2012. THE SAID SEARCH OPERATION WAS IN CONSEQUENCE OF SEARCH UNDERTAKEN IN CHALLANI GROUP OF CASES IN CHENNAI ON 19-04-2012, WHERE ONE DIAMOND STUDDED JEWELLERY WAS FOUND. MR. JAYANTILAL CHALLANI HAD DEPOSED THAT HE HAD PURCHASED ABOVE SAID DIAMON D STUDDED JEWELLERY FROM THE ASSESSEE HEREIN BY PAYING CASH AND ALSO AG REED TO DECLARE THE SAME AS HIS UNACCOUNTED INVESTMENT. CONSEQUENTLY, THE ASSESSMENT OF AY 2012-13 WAS COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT AND THE ASSESSMENT OF AY 2013-14 WAS COMPLETED U/S 143(3) O F THE ACT. IN BOTH THE YEARS, THE AO REJECTED THE BOOKS OF ACCOUNTS AN D ESTIMATED THE TOTAL INCOME @ 4.50% OF THE TURNOVER OF THAT YEAR. ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 3 OF 9 5. AS STATED EARLIER, THE LD CIT(A) CONFIRMED REJEC TION OF BOOKS OF ACCOUNTS IN AY 2013-14, BEING THE YEAR OF SEARCH IN VIEW OF DEFICIENCIES FOUND DURING THE COURSE OF SEARCH. CONSIDERING THE DEFICIENCIES NOTICED DURING THE COURSE OF SEARCH PROCEEDINGS, THE AO HAD ALSO REJECTED THE BOOKS OF ACCOUNTS IN AY 2012-13, I.E., THE YEAR IMM EDIATELY PRECEDING THE YEAR OF SEARCH. SINCE THE AO DID NOT POINT OUT ANY SPECIFIC DEFICIENCY IN AY 2012-13, THE LD CIT(A) HELD THAT THE REJECTION OF B OOKS OF ACCOUNTS IN THAT YEAR IS NOT JUSTIFIED. BEFORE LD CIT(A), THE ASSESS EE HAD TAKEN ALTERNATIVE CONTENTION IN BOTH THE YEARS THAT THE ESTIMATE SHOU LD BE MADE ONLY AT GROSS PROFIT LEVEL AND NOT AT NET PROFIT LEVEL AS D ONE BY THE AO. THE LD CIT(A) ACCEPTED THE ABOVE SAID ALTERNATIVE CONTENTI ONS IN BOTH THE YEARS AND ACCORDINGLY APPLIED THE RATE OF 4.50% AT GROSS PROFIT LEVEL AND ALLOWED DEDUCTION OF EXPENSES. 6. IN THE APPEAL FILED BY THE ASSESSEE, THE REJECTI ON OF BOOKS OF ACCOUNTS AND ESTIMATION OF INCOME ARE BEING CONTEST ED. IN THE APPEAL OF THE REVENUE, THE RELIEF GRANTED BY LD CIT(A) IS BEI NG CONTESTED. THE FIRST ISSUE RELATES TO THE REJECTION OF BOOKS OF ACCOUNTS . ACCORDING TO THE ASSESSEE, IT HAS OFFERED EXPLANATIONS TO ALL THE QU ERIES RAISED BY THE AO AND EXPLAINED THE DIFFERENCES, IF ANY, NOTICED DURI NG THE COURSE OF SEARCH. HENCE THERE IS NO JUSTIFICATION FOR REJECTION OF BO OKS OF ACCOUNTS IN AY 2013-14. THE ASSESSEE HAS FURTHER CONTENDED THAT T HE AO HAS NOT FOUND ANY DEFICIENCY IN THE BOOKS OF ACCOUNTS PERTAINING TO AY 2012-13. THE AO HAS SIMPLY FOLLOWED HIS DECISION TAKEN FOR AY 2013- 14 FOR REJECTION OF BOOKS OF ACCOUNTS IN AY 2012-13 ALSO. ACCORDINGLY IT WAS CONTENDED THAT THE REJECTION OF BOOKS OF ACCOUNTS FOR ASSESSMENT Y EAR 2012-13 IS NOT JUSTIFIED. THE LD A.R REITERATED THE CONTENTIONS R AISED BEFORE THE TAX AUTHORITIES IN THIS REGARD. THE LD D.R, ON THE CON TRARY, SUBMITTED THAT THE SEARCH ACTION REVEALED THAT THE BOOKS OF ACCOUNTS M AINTAINED BY THE ASSESSEE ARE NOT RELIABLE FOR THE REASONS DISCUSSED BY THE AO IN THE ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 4 OF 9 ASSESSMENT ORDER. HE SUBMITTED THAT THE DEFICIENCI ES POINTED OUT BY THE TAX AUTHORITIES ARE RELATED TO THE STATE OF AFFAIRS OF BUSINESS CARRIED ON BY THE ASSESSEE. HENCE THE SAME CANNOT BE RESTRICTED TO THE YEAR OF SEARCH ALONE. HE SUBMITTED THAT THE THEORY OF PREPONDERAN CE OF PROBABILITIES COULD VERY WELL BE APPLIED IN INCOME TAX PROCEEDINGS. SI NCE THE ASSESSMENT OF AY 2012-13 CAME TO BE REOPENED ON ACCOUNT OF SEARCH , THE FINDINGS RELATED TO THE STATE OF AFFAIRS OF THE ASSESSEE FOU ND IN THE YEAR OF SEARCH CAN BE APPLIED TO THE YEAR RELEVANT TO AY 2012-13 A LSO. 7. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED T HE RECORD. WE HAVE NOTICED EARLIER THAT THE SEARCH PROCEEDINGS IN THE HANDS OF THE ASSESSEE WERE CONDUCTED AS A CONSEQUENCE OF SEARCH CONDUCTED IN CHALLANI GROUP, CHENNAI. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE UNACCOUNTED DIAMOND STUDDED JEWELLERY FOUND IN THE HANDS OF CHALLANI WAS PURCHASED BY THEM FROM THE ASSESSEE HEREIN. HO WEVER, WE NOTICE THAT THERE IS DIFFERENCE WITH REGARD TO THE EXPLANA TIONS OFFERED IN THAT REGARD BY MR. CHALLANI AND THE ASSESSEE, I.E., MR. CHALLAN I HAS STATED THAT THE ABOVE SAID JEWELLERY HAS ALREADY BEEN PURCHASED BY HIM BY PAYING CASH TO THE ASSESSEE. HOWEVER, THE ASSESSEE HAS STATED THA T IT HAS SENT THE JEWELLERY ON SALE OR APPROVAL BASIS TO MR. CHALLANI . FROM THE ASSESSMENT ORDER, IT IS NOT CLEAR AS TO WHETHER THE ABOVE SAID JEWELLERY WAS SHOWN AS ASSESSEES STOCK, IF THE CLAIM OF THE ASSESSEE THAT THE SAME HAS BEEN SENT ON APPROVAL BASIS WAS CORRECT. NO EXPLANATION IS A LSO AVAILABLE AS TO THE CLAIM OF MR. CHALLANI THAT HE HAS ALREADY PAID CASH TOWARDS THE COST OF JEWELLERY. THESE DISCREPANCIES REMAIN UNRESOLVED. FURTHER, THE VALUE OF STOCK SENT TO MR. CHALLANI WAS SHOWN AT RS.3.21 CRO RES, WHILE THE OFFICIAL VALUER HAS VALUED THE SAME AT RS.4.09 CRORES. 8. WE NOTICE THAT THE SEARCH OFFICIALS HAVE FOUND D IFFERENCE BETWEEN BOOK STOCK AND PHYSICAL STOCK AND THE SAME HAS BEEN TABULATED AS UNDER:- ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 5 OF 9 ASSESSMENT YEAR : 2012-13 ITEMS A S PER BOOKS PHYSICAL STOCK DIFFERENCE GOLD 70.72 KGS 21.78 KGS 48.94 KGS LOOSE DIAMONDS 12,761.642 CARAT 9505 .965 CARAT 3255.677 CARAT DIAMONDS IN JEWELLERY 7543.296 CARAT 2295.315 CARAT 5248.101 CARAT BULLION 731.603 GRAMS 767.080 GRAMS 35.477 GRAMS THE ASSESSEE HAS EXPLAINED THE DIFFERENCE BEFORE TH E SEARCH OFFICIALS. THE MAIN EXPLANATIONS OFFERED WERE THAT :- (A) GOODS HAVE BEEN SENT ON APPROVAL BASIS TO ITS R ELATED CONCERNS NAMED M/S SRI KRISHNA DIAMONDS (ON CONSIGNMENT BASI S). (B) GOODS SENT TO GOLD SMITHS FOR MAKING JEWELLERY . (C) SOME GOODS ARE AVAILABLE WITH ANOTHER RELATED CONCERN NAMED M/S RAJ DIAMONDS. AFTER GIVING CREDITS FOR ABOVE ITEMS, THE SEARCH TE AM FOUND THAT THERE WERE STILL DIFFERENCE OF 201.848 CARAT OF DIAMONDS JEWEL LERY (EXCESS); DEFICIT OF 9.884 KGS OF GOLD AND EXCESS OF 95.199 CARAT OF LOO SE DIAMONDS. THE SEARCH TEAM ALSO FOUND THAT THE ASSESSEE HAS NOT CO LLECTED ACKNOWLEDGEMENTS FROM THE GOLD SMITHS FOR THE GOLD GIVEN TO THEM. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS BEEN USING SEVER AL KINDS OF VOUCHERS FOR GOODS SENT ON APPROVAL BASIS AND SOME OF THEM H AVE NOT BEEN INCLUDED IN THE COMPUTER SYSTEM FOR INVENTORY. THE SEARCH O FFICIALS HAVE ALSO NOTICED THAT THE SEVERAL CASH SALES BILLS IN THE NA ME OF AURA JEWELS HAVE NOT BEEN INCLUDED IN THE SALES REFLECTED IN THE BOO KS OF ACCOUNTS. ACCORDINGLY THEY HAVE STATED IN THE APPRAISAL REPOR T THAT THE BOOKS OF THE ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 6 OF 9 ASSESSEE ARE NOT RELIABLE. THE AO HAS ALSO SUMMARI SED VARIOUS DEFICIENCIES AS UNDER:- (A) DIFFERENCE BETWEEN VALUE OF THE STOCK SENT TO MR. SRIPAL CHALLANI (RS.3.21 CRORES) AND AS VALUED BY OFFICIAL VALUER ( RS.4,09,54,141/-) INDICATES SUPPRESSION OF SALES. (B) STOCK VARIATION IN RESPECT OF BOOK STOCK AND P HYSICAL STOCK AS ON DAY OF SEARCH WHICH IS NOT RECONCILED TO THIS DATE. (C) PRESENCE OF VARIOUS CASH SALES BILLS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS AS ON THE DAY OF SEARCH. (D) DESTROYING OF APPROVAL VOUCHERS ISSUE PRIOR TO 1.4.2012 WHICH MAKES IT IMPOSSIBLE TO VERIFY GENUINENESS OF THE AP PROVALS ISSUED TO VARIOUS PARTIES. (E) INCONSISTENCIES IN THE RATES OF SALE PARTICUL ARLY W.R.T LOOSE DIAMONDS AS COMPARED TO COST OF PURCHASE INCLUDED I N CLOSING STOCK. (F) BESIDES THE ABOVE A SURVEY U/S 133A WAS CARRIE D OUT AT ANOTHER PREMISES OF THE ASSESSEE LOCATED AT NO.122, NEELA C OMPLEX, 3 RD FLOOR, C T STREET, NAGARTHPET, BANGALORE 560 002 ON 20-04-2012 AND A SWORN STATEMENT WAS RECORDED U/S 131 OF THE I NCOME TAX ACT FROM MR. PRADEEP SAITHA, MANAGER OF THE SHOW ROOM. IT HAS BEEN OBSERVED THAT THERE WAS EXCESS OF 7.442 CARATS OF D IAMOND AND 80.751 GRAMS OF GOLD JEWELLERY. THE SAME HAS NOT B EEN EXPLAINED BY HIM ON THE DAY OF SURVEY. THE ASSESSEE HAS ALSO NOT EXPLAINED THIS DISCREPANCY. (G) ANOTHER IMPORTANT FACET TO THIS MATRIX IS THE F ACT THAT THERE IS NO STOCK DETAIL AVAILABLE WITH THE ASSESSEE BASED ON T HE GRADING OF DIAMONDS. THIS IS ESPECIALLY GLARING WHEN THE ASSE SSEE CLAIMS TO BE ONE OF THE LARGEST DEALERS OF LOOSE DIAMONDS IN SOUTH INDIA. DIAMONDS ARE GRADED ACCORDING TO ITS CUT, COLOUR, C LARITY AND CARATAGE TAKING INTO ACCOUNT INCLUSIONS/SPOTS. (FOR EXAMPLE, VS (VERY SMALL), VVS (VERY VERY SMALL) AND GOING UPTO E & F WHICH REFER TO THE FINEST QUALITY). ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 7 OF 9 9. EVEN THOUGH THE ASSESSEE HAS OFFERED EXPLANATION S ON VARIOUS POINTS, WE NOTICE THAT THE ASSESSEE HAS ROPED IN IT S SISTER CONCERNS TO EXPLAIN THE DIFFERENCE IN STOCKS. THE EXPLANATION G IVEN FOR MAINTAINING DIFFERENT SETS OF APPROVAL BOOKS IS NOT CONVINCIN G. THERE IS NO EVIDENCE TO SUBSTANTIATE THE EXPLANATIONS THAT THE GOODS WERE G IVEN TO GOLD SMITHS, I.E., IT HAS BEEN CLAIMED THAT THE GOLD WAS ISSUED TO THE M WITHOUT ANY ACKNOWLEDGMENT SLIP. IN ANY CASE, THE GOLD SMITHS ARE UNDER THE CONTROL OF THE ASSESSEE ONLY. THERE IS NO PROPER EXPLANATION AS TO WHY THE APPROVAL BOOKS PERTAINING TO THE PERIOD PRIOR TO 1.4.2012 W AS DESTROYED. THOUGH THE ASSESSEE HAS OFFERED EXPLANATIONS AS TO WHY THE CASH SALES MADE TO AURA JEWELS WAS NOT ACCOUNTED FOR, YET THE SAME IS ALSO SELF SUPPORTING EXPLANATIONS. IT IS IN THE COMMON KNOWLEDGE THAT T HE RATE OF DIAMOND WOULD DEPEND UPON FOUR CS, I.E., CARAT, COLOUR, C LARITY AND CUT. THE AO HAS NOTICED THAT THE ASSESSEE DID NOT MAINTAIN GRAD E WISE STOCK DETAILS, WHICH IS UNLIKELY. THIS FACT ALONE WOULD SHOW THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS. ON THE WHOLE, WE NOTICE THAT THE EXPLANATIONS FURNISHED BY THE ASSESSEE ON VARIOUS T YPES OF DEFICIENCIES NOTICED BY THE REVENUE ARE SELF SUPPORTING EXPLANAT IONS, I.E., NO THIRD PARTY EVIDENCES OR MATERIALS WERE BROUGHT ON RECORD BY TH E ASSESSEE TO EXPLAIN THE DIFFERENCES. HENCE WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BOOK RESULTS IN AY 2013- 14. 10. WE HAVE NOTICED THAT THE AO HAS REJECTED THE BO OK RESULTS OF ASSESSMENT YEAR 2012-13 ALSO BY CONSIDERING THE VAR IOUS TYPES OF DEFICIENCIES NOTICED BY THE SEARCH TEAM. THE CONTE NTION OF THE ASSESSEE IS THAT THE AO SHOULD NOT HAVE REJECTED THE BOOK RESUL TS OF AY 2012-13, AS THE ALLEGED DEFICIENCIES DO NOT RELATE TO THE FINAN CIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2012-13. WE HAVE NOTICED THAT THE ASSESSMENT OF AY 2012-13 HAS BEEN REOPENED U/S 153A OF THE ACT CONSE QUENT TO SEARCH OPERATIONS CONDUCTED U/S 132 OF THE ACT. HENCE ASS ESSMENTS OF AY 2012- ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 8 OF 9 13 AND 2013-14 HAVE BEEN COMPLETED TOGETHER BY THE ASSESSING OFFICER. FURTHER, IN OUR VIEW, THE DEFICIENCIES NOTICED BY T HE SEARCH TEAM CANNOT BE CONSIDERED TO BE ASSESSMENT YEAR SPECIFIC, SINCE IT ONLY REVEALED A PARTICULAR PATTERN FOLLOWED BY THE ASSESSEE OR THE GENERAL STATE OF AFFAIRS OF BUSINESS CARRIED ON BY THE ASSESSEE. THE AO HAS AL SO OBSERVED THAT THE APPROVAL VOUCHERS PERTAINING TO THE PERIOD PRIOR TO 1.4.2012 HAS BEEN DESTROYED AND FURTHER THE GRADE WISE STOCK DETAILS OF DIAMONDS HAVE NOT BEEN MAINTAINED. SINCE THE SEARCH TEAM HAS FOUND O UT PARTICULAR PATTERN FOLLOWED BY THE ASSESSEE, WHICH IS FOUND TO BE DEFE CTIVE AND FURTHER THE STATE OF AFFAIRS OF BUSINESS CARRIED ON BY THE ASSE SSEE IS FOUND TO BE UNRELIABLE, IN OUR VIEW, THE AO WAS JUSTIFIED IN RE JECTING THE BOOK RESULTS FOR AY 2012-13 ALSO. 11. NEXT ISSUE RELATES TO THE ESTIMATION OF INCOME OF THE ASSESSEE FOR BOTH THE YEARS UNDER CONSIDERATION. WE HAVE NOTICE D THAT THE AO HAS ESTIMATED THE NET INCOME OF THE ASSESSEE @ 4.50% OF THE TURNOVER. HOWEVER, THE LD CIT(A) HAS ESTIMATED THE GROSS PROF IT OF THE ASSESSEE BY ADOPTING THE VERY SAME RATE OF 4.50% AND HAS ALLOWE D DEDUCTION OF VARIOUS EXPENSES/LOSSES CLAIMED BY THE ASSESSEE. THERE SHO ULD NOT BE ANY DOUBT THAT, AFTER REJECTION OF BOOK RESULTS, THE RATE OF GROSS PROFIT COULD BE DETERMINED BY CONSIDERING THE GROSS PROFIT LEVEL DE CLARED BY COMPARABLE CASES. WHILE WE AGREE WITH THE VIEW OF THE LD CIT( A) THAT THE PROFIT SHOULD HAVE BEEN ESTIMATED AT GROSS PROFIT LEVEL, WE NO TICE THAT THE LD CIT(A) HAS NOT BROUGHT ANY COMPARABLE CASES TO DETERMINE T HE GROSS PROFIT RATE AT 4.50% IN BOTH THE YEARS. HENCE, THERE IS FALLACY I N THE APPROACH OF THE LD CIT(A) IN THIS REGARD, WHICH CANNOT BE UPHELD. WE ALSO NOTICE THAT THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO EXAMIN E VARIOUS EXPENSES CLAIMED BY THE ASSESSEE, SINCE HE HAD ESTIMATED THE NET PROFIT. ACCORDINGLY, WE ARE OF THE VIEW THAT MATTERS RELATI NG TO ESTIMATION OF GROSS PROFIT RATE BY CONSIDERING COMPARABLE CASES AND EXA MINATION OF VARIOUS ITA NOS. 1335 & 1336/BANG/2017 & 1393 & 1394/BANG/2017 PAGE 9 OF 9 EXPENSES CLAIMED BY THE ASSESSEE REQUIRE FRESH EXAM INATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE T HE ORDERS PASSED BY LD CIT(A) IN BOTH THE YEARS AND RESTORE THE ISSUES REL ATING TO ESTIMATION OF GROSS PROFIT RATE AND EXAMINATION OF VARIOUS EXPENS ES CLAIMED BY THE ASSESSEE IN BOTH THE YEARS TO THE FILE OF THE ASSES SING OFFICER, WHO SHALL EXAMINE THEM IN ACCORDANCE WITH LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE AND REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF APRIL,2020. SD/- SD/- ( N V VASUDEVAN ) ( B R BASKARAN ) VICE PRESIDENT ACCOUNTANT M EMBER BANGALORE, DATED, THE 28 TH APRIL, 2020. / DESAI S MURTHY / COPY TO: 1. ASSESSEE 2. REVENUE 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.