Narender Kumar Anand, Delhi V. ITO, Ward- 35(3), New Delhi

ITA 7376/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4343 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 08-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Assessee Lawyers: DEVINDER PAL
• Keywords: Rejection of books of accounts
• Section: 133(6); 13; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7376/DEL/2017 ASSESSMENT YEAR : 2013-14 SH. NARENDER KUMAR ANAND, A-454, SHASTRI NAGAR, DELHI-11052 VS ITO, WARD-35(3), NEW DELHI PAN-AHOPA9287G APPELLANT RESPONDENT APPELLANT BY SH. DEVINDER PAL. ADV. RESPONDENT BY SH. GAURAV PUNDIR, SR. DR DATE OF HEARING 28.09.2021 DATE OF PRONOUNCEMENT 01 . 10 .2021 ORDER PER SANJAY GARG, JM : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 18.09.2017 OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS)-12, NEW DELHI, (HEREINAFTER REF ERRED TO CIT(A)) FOR THE ASSESSMENT YEAR 2013-14. THE A SSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- ITA NO. 7376/DEL/2017 2 | P A GE 1. THAT IN THE FACTS AND ON THE CIRCUMSTANCES OF THE C ASE THE IMPUGNED ORDER AS PASSED BY THE LD. CIT (A) DATED 18.09.2017 IS BAD AND AGAINST THE LAW AS THE SAME IS BASED ON SURMISES, SUSPICION AND CONJUNCTURES. 2. THAT THE LD. CIT (A) WHILE UPHOLDING THE ARBITRARY ADDITION MADE BY THE LD. AO, WARD 35(3) TO THE TUNE OF RS. 1,44,13,587.00, COMPLETELY IGNORED THE ADMITTED OBSERVATIONS MADE IN PARA 8 OF THE ASSESSMENT ORDER DATED 23.03.2016 WHEREIN THE LD. AO HIMSELF ADMITTED THAT NO COMPARATIVE GP RATE OF SUCH TRADING IN TOBACCO IS AVAILABLE IN ANY OTHER C ASE THEREFORE SUSTAINING ADDITIONS ON SUCH ADMITTED OBSERVATIONS IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND IS BAD IN LAW. 3. THAT THE LD. CIT (A) APPEAL WHILE UPHOLDING THE ADDITION OF RS. 1,44,13,587.00 IN THE HANDS OF THE APPELLANT/ASSESSEE, THE LD. CIT (A) COMPLETELY IGNORED FROM ITS CONSIDERATION THE COMPARATIVE CHAR T OF MARGINS IN THE SAME TRADE PLACED ON RECORD AND FURTHER DID NOT TAKE INTO ACCOUNT THE SETTLED PRINC IPLES OF LAW THAT WHENEVER AN ESTIMATE IS TO BE MADE IT SHOULD BE ARRIVED AT AFTER JUDICIOUS APPLICATION OF MIND WHICH SHOULD BE LEGITIMATE, JUST AND COGENT IN TERMS OF MATERIAL AVAILABLE ON RECORD AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN TRADING IN TOBACCO UNDER THE NAME & STYLE M/S HIMALAYAN ENTERPRISES. THE ASSESSEE DURING THE YEAR DECLARED NET TAXABLE INCOME OF RS.6,27,480/-. THE C ASE WAS SELECTED FOR SCRUTINY FOR THE REASONS OF LOW NET PRO FIT/LOSS SHOWN ITA NO. 7376/DEL/2017 3 | P A GE FROM LARGE GROSS RECEIPTS. DURING THE ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S SHOWN AN OPENING STOCK AT NIL AND MADE PURCHASES OF RS.80,30 ,04,497/- DURING THE YEARS. AS PER BALANCE SHEET, THE ASSESSE E MADE SALES AMOUNTING TO RS.77,01,13,308/- LEAVING A CLOSING ST OCK OF RS.3,38,79,868/-. THE TOTAL/EXPENSES WERE SEEN AT B ARE- MINIMUM PROMINENT AND TOTALED AT RS.3,57,159/- PROM INENT AMONG THEM BEING SALARY AMOUNTING TO RS.1,80,000/- AND RENT AMOUNTING TO RS.60,000/-. THE PECULIAR THING NOTED WAS THAT THE ASSESSEE CLAIMED ALMOST NOMINAL EXPENSES FOR MA KING SUCH HUGE SALES AND PURCHASES. DESPITE ALL THESE, STILL THE GROSS PROFIT WAS STILL VERY LOW AT RS.9,88,679/- I.E. 0.13 % OF THE PURCHASES. SINCE, THE PROFITS SHOWN BY THE ASSESSEE WERE APPEARED TO BE MEAGER AS COMPARED TO THE TURNOVER O F THE ASSESSEE, THE ASSESSING OFFICER, THEREFORE, ISSUED QUESTIONNAIRE TO THE ASSESSEE ASKING THE ASSESSEE TO PROVIDE DETA ILS IN THIS RESPECT. HE FURTHER REQUIRED THE ASSESSEE TO PROVI DE ADDRESS OF THE SUNDRY DEBTORS AND THE CREDITORS. AFTER GETTIN G THE ADDRESSES OF THE SUNDRY DEBTORS AND CREDITORS, THE ASSESSING OFFICER ISSUED NOTICE TO THEM U/S 133(6) OF THE INC OME TAX ACT, ITA NO. 7376/DEL/2017 4 | P A GE 1961 (HEREINAFTER REFERRED TO THE ACT). HOWEVER, DESPITE REPEATED NOTICE AND REMINDERS TO VARIOUS PARTIES NO CONFIRMATION WAS RECEIVED REGARDING THE TRANSACTIONS IN QUESTION. ALL THE ADDRESSES PROVIDED BY THE ASSES SEE IN RESPECT OF SUNDRY DEBTORS AND CREDITORS WERE RECEIVED BACK WITH ADVERSE POSTAL COMMENTS OF NONEXISTENCE NOT FOUND ETC. EVEN THE CONFIRMATION RECEIVED FROM TWO SUNDRY CREDITORS WAS ALSO FIND DEFECTIVE/INCOMPLETE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER THEREAFTER, ASKED THE ASSESSEE TO PRODUCE T HE PARTIES SO AS TO AUTHENTICATE THE SALES/PURCHASES AND SUNDRY DEBTOR/CREDITORS, BUT NOBODY APPEARED ON BEHALF OF THESE PARTIES. THE ASSESSEE, HOWEVER, HAD SHOWN HIS INABIL ITY/CONTROL OVER THE RESPECTIVE PARTIES TO PRODUCE THEM BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS DRAWN A CHART IN THE ASSESSMENT ORDER IN RESPECT OF PARTIES WHOM THE NOTI CES WERE ISSUED AND STATUS OF THEIR RESPONSES, WHICH FOR THE SAKE OF READY REFERENCE IS REPRODUCED AS UNDER:- SI. NO . NAME OF THE PARTY NOTICE ISSUED ON DATE STATUS OF RESPONSE 1 A.K. INTERNATIONAL 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS NO SUCH FIRM. 2 ADINATH ENTERPRISES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS NO SUCH FIRM. ITA NO. 7376/DEL/2017 5 | P A GE 3 ADISH TRADING CO. 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS NO SUCH PERSON. 4 AGGARWAL ENTERPRISES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS LEFT WITHOUT ADDRESS. 5 ARYAN SALES CORPORATION 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS NO SUCH PERSON. 6 B.P.N. TRADING CO. 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS.. 7 EASTERN TRADING CO. 18.11.2015 REMINDER SENT. RECEIVED BACK WITH ADVERSE POSTAL COMMENTS NO SUCH FIRM. 8 KUMAR SALES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS LEFT WITHOUT ADDRESS. 9 MAA DURGA ENTERPRISES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 10 NAVEEN INTERNATIONAL 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 11 PARAS SALES CORPORATION 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 12 SATYAM ENTERPRISES 18.11.2015 REMINDER SENT ON 24.02.2016. RECEIVED BACK WITH ADVERSE POSTAL COMMENTS NO SUCH PERSON. 13 SHIVA INTERNATIONAL 18.11.2015 REMINDER SENT. RECEIVED BACK WITH ADVERSE POSTAL COMMENTS NO SUCH FIRM. 14 TECHNO SALES CORPORATION 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 15 VISHAL ENTERPRISES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 16 YOJNA SALES (INDIA) 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS LEFT 17 NIHAL CHAND DIWAN CHAND 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 18 SHREE BALAJI ENTERPRISES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS INCOMPLETE ADDRESS. 19 SHRI RAM ENTERPRISES 18.11.2015 RETURN BACK WITH ADVERSE POSTAL COMMENTS LEFT 20 VANDANA INTERNATIONAL EXPORT (JAIPUR) 18.11.2015 RECEIVED ON 30.11.2015, REPLY RECEIVED BUT THE FIRM DOES NOT KNOW TO MR. NARINDER KUMAR ANAND OR HIMALAYAN ENTERPRISES ITA NO. 7376/DEL/2017 6 | P A GE 3. THE ASSESSING OFFICER ALSO NOTED THAT THE ONE O F THE PARTY VANDANA INTERNATIONAL EXPORT (JAIPUR) VIDE IT S REPLY DATED 27.11.2015 CATEGORICALLY DENIED ANY KIND OF FINANCI AL OR TRADE TRANSACTION WITH THE ASSESSEE. THE ASSESSING OFFICER , THEREFORE, OBSERVED THAT IT WAS EVIDENT THAT THE ASSESSEES SAL ES/SUNDRY DEBTORS WERE NOT CONFIRMED BY THE RESPECTIVE PARTIE S. HE OBSERVED THAT NOTICES WERE ISSUED TO LARGE NUMBER O F PARTIES TO VERIFY THE SALES/PURCHASES AND SUNDRY DEBTORS/CREDI TORS, HOWEVER, ALL THE NOTICES REMAINED UNCOMPLIED WITH OR WERE RECEIVED BACK WITH ADVERSE POSTAL COMMENT WHICH WAS HI GHLY IMPROBABLE. IN THE CASE OF THE ASSESSEE, NONE OF TH E SUNDRY DEBTORS HAD CONFIRMED THEIR TRANSACTIONS AND EVEN O NE PARTY CATEGORICALLY DENIED ANY FINANCIAL/TRADE LINK WITH T HE ASSESSEE. THE ASSESSING OFFICER CONSIDERING ALL THE MATERIAL FACTS ON RECORD REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ASSED THE GROSS PROFITS OF THE ASSESSEE AT 2% OF GROSS SALES. 4. BEING AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BE FORE THE LD. CIT(A). ITA NO. 7376/DEL/2017 7 | P A GE 5. BEFORE THE LD. CIT(A), IT WAS PLEADED THAT THE A SSESSEE HAD MAINTAINED AUDITED BOOKS OF ACCOUNT AND VARIOUS STATUTORY TAXES WERE PAID ON THE PURCHASES/SALES AND THAT BOO KS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN WRONGLY REJECTED BY THE ASSESSING OFFICER. IT WAS ALSO PLEADED THAT ESTIMAT ION OF THE GROSS PROFIT @ 2% OF THE SALES WAS ON HIGHER SIDE. THAT THERE WAS NO COMPARATIVE DATA AVAILABLE TO THE ASSESSING O FFICER TO ASSESS THE GROSS RECEIPTS @ 2%. HOWEVER, THE LD. C IT(A) DID NOT GET CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE A ND DISMISSED THE APPEAL OF THE ASSESSEE, OBSERVING AS UNDER:- 6.3.1 THE APPELLANT HAS TAKEN FOUR GROUNDS OF APPEAL RELAT ED TO THE ADDITION OF RS. 1,54,02,266/- AGAINST COMPUT ATION OF GROSS PROFITS @ 2% OF THE SALES BY THE ASSESSING OF FICER. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF TO BACCO UNDER THE NAME & STYLE M/S HIMALAYAN ENTERPRISES SIT UATED IN BURALI, CHANDIGARH,. THE ASSESSING OFFICER OBSER VED THAT THE GROSS PROFIT DECLARED BY THE. ASSESSEE WAS @ 0.1 3% OF TOTAL PURCHASES. IN THE ASSESSMENT ORDER, THE ASSESS ING OFFICER HAS NOTED THAT THE NOTICES ISSUED BY HIM TO THE SUNDRY CREDITORS / SUNDRY DEBTORS REMAINED UNANSWERED . THE PARTIES DID NOT CONFIRM THE ACCOUNTS. THE NOTICE S IN RESPECT OF SUNDRY DEBTORS WERE RECEIVED BACK WITH ADVE RSE POSTAL COMMENTS. ONLY TWO PARTIES SENT THE REPLIES WHICH WERE INCOMPLETE / DEFECTIVE. THE ASSESSING OFFICER A SKED THE ASSESSEE TO PRODUCE THE PARTIES TO PROVE THE SALES / PURCHASES. NOBODY APPEARED FROM THE PARTIES. ONE SUNDR Y DEBTOR M/S VANDANA INTERNATIONAL EXPORTS, JAIPUR DEN IED-TO HAVE DONE ANY BUSINESS WITH THE ASSESSEE. TWO SUNDRY CREDITORS NAMELY M/S KAY PAN FRAGRANCE PRIVATE LIMI TED AND M/S KAY PAN MASALA PRIVATE LIMITED SENT INCOMPL ETE ITA NO. 7376/DEL/2017 8 | P A GE CONFIRMATION. THE ASSESSING OFFICER ASKED THE ASSESS EE .TO SHOW CAUSE WHY BOOKS OF ACCOUNT BE NOT REJECTED AS P ER PROVISIONS OF SECTION 1.45(3) OF THE I.T. ACT. ACCO RDING TO THE ASSESSING OFFICER GP @ 0.13% WAS VERY LOW. DESPITE T HE FACT THAT NO SIGNIFICANT EXPENSES WERE INCURRED. ON PAGE 4 & 5 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS PREPARED THE LIST OF THE PARTIES WHICH DID NOT REPLY THE NOTI CES SENT BY HIM WITH THE REMARKS ON THE COMPLIANCE. THE ASSESSI NG OFFICER HAS HIGHLIGHTED THE REPLY FROM M/S VANDANA INTERNATIONAL EXPORTS THAT THEY DID NOT EVEN KNOW M R. NARENDER KUMAR ANAND PROP. M/S HIMALAYAN ENTERPRISES AND HAD NOT ENTERED INTO ANY FINANCIAL OR TRADE TRAN SACTIONS. THE ASSESSING OFFICER FURTHER COMMENTED THAT THE PUR CHASES ARE MADE .MAINLY FROM TWO PARTIES AND SALES HAVE BEE N SHOWN TO NON-EXISTING AND FICTITIOUS PARTIES. NOTICE S IN 100% CASES REMAINED UNCOMPLIED WITH. THE ASSESSEE. DID NOT REPLY TO THE SHOW CAUSE, NOTICE ISSUED BY THE ASSESS ING OFFICER WITH REGARD TO INVOKING THE PROVISIONS U/S 145(3) OF THE I.T. ACT. ACCORDINGLY, THE ASSESSING OFFICER RE JECTED THE BOOK RESULTS U/S 145(3) AND APPLIED GP RATE OF 2% ON THE GROSSSALES. THE ASSESSING OFFICER FURTHER OBSERVED ON THE PERUSAL OF SALE / PURCHASE BILL SUBMITTED, BY THE A SSESSEE THAT THE PRODUCTS ARE SOLD @ RS.1.50 TO RS.2.50 PER P ACKET, ABOVE THE. PURCHASE PRICE. THE ASSESSING OFFICER CO NCLUDED THAT THE GROSS PROFIT IS IN THE RANGE OF 2 TO 3 PER CENT ON THE PRODUCTS. EXACT MATCHING OF SALE / PURCHASES IS NOT POSSIBLE AS NO DETAILED DESCRIPTION OF THE PRODUCT WAS AVAILAB LE. THE SALES DECLARED BY THE ASSESSEE WERE RS.77,01,13,308/ - ON APPLYING GP RATE OF 2%, THE GROSS PROFIT HAS BEEN W ORKED OUT AT RS.L,54,02,266/-. THUS, THE ASSESSING OFFICER HA S MADE THE ADDITION OF RS.L,44,13,587/-. 6.3.2 IN THE WRITTEN ARGUMENTS, THE LD. AR FOR THE APPELLA NT HAS STATED THAT MERE NON CONFIRMATION OR PARTIAL CON FIRMATION OF THE STATEMENT OF ACCOUNT BY THE SUNDRY DEBTORS / CREDITORS CANNOT BE SOLE GROUND OF REJECTION OF BOOKS. IF THE PURCHASES ARE FOUND GENUINE, BY THE ASSESSING OFFICER, THE SAL ES CANNOT BE DOUBTED. IN PARA 2 OF THE WRITTEN SUBMISSION . DA TED 15.09.2017, THE APPELLANT HAS GIVEN THE MARGIN DETA ILS AT THE LEVEL OF COMPANY, DISTRIBUTOR, WHOLESALER, SALE SMAN AND PANWARI. BUT THE FIGURES SUPPLIED BY THE LD. ARS HAVE NOT BEEN SUPPORTED BY THE RELEVANT FACTS AND DOCUMENTS. T HE LD. ITA NO. 7376/DEL/2017 9 | P A GE ARS HAVE GIVEN THE EXAMPLE OF M/S KOTHARI PRODUCTS L IMITED - MANUFACTURER OF GUTKHA, TOBACCO AND PAN-PARAG TO S HOW THAT THEIR MARGIN IS 2.39%. SIMILARLY, THE MARGIN I N THE CASE OF M/S TIRUPATI FRAGRANCES PRIVATE LIMITED RELATING TO F.Y. 2012-13 WAS 3.6.5%. IT IS ARGUED THAT THESE TWO- CO MPANIES SPEND A LOT ON ADVERTISEMENT. IF TOBACCO (PACKED) PR ICE IS RS.2/ PER POUCH THEN COST OF* CONSUMPTION IS RS.L.9 1 AND THE PROFIT IS 0.046 PAISE PER PACK I.E. 2.3%. IT IS FUR THER SUBMITTED THAT THE POSITION OF FURTHER COMPANIES IN THIS TRAD E IS SAME. IT IS ARGUED THAT THE ABOVE MARGINS ARE FOR THE MANUFAC TURER. THE ASSESSING OFFICER IS NOT ENTITLED TO MAKE A PURE GUESS WITH REFERENCE TO ANY EVIDENCE OR MATERIAL. THERE M UST BE SOMETHING MORE THAN MERE SUSPICION TO SUPPORT AN ASSESSMENT ORDER U/S 143(3). SINCE THE ASSESSEE IS THE FIRST STAGE PERSON IN THE MARKETING SALE AND HAS TO TAKE C ARE OF CHUNK OF PROFIT IN SUPPLY CHAIN, THEREFORE, THE GP EARNED BY HIM IS IN CONSONANCE AND AGREEMENT WITH HIS TRADE PR ACTICES AND BEYOND DOUBT. 6.3.3 I HAVE GONE THROUGH THE RELEVANT FACTS OF THE CASE' AND SUBMISSION OF THE APPELLANT. THE ASSESSING OFFICER HAS ADMITTED THAT PURCHASES ARE FROM TWO PARTIES NAMELY M/S KAY PAN FRAGRANCES PRIVATE LIMITED AND M/S KAY PAN MASALA PRIVATE LIMITED. THE CONFIRMATIONS FROM THES E TWO PARTIES, THOUGH INCOMPLETE, WERE RECEIVED. BUT THE MAJOR PROBLEM WAS WITH RESPECT TO THE CONFIRMATION FROM T HE SUNDRY DEBTORS IN RESPECT OF WHICH IT IS STATED BY TH E ASSESSING OFFICER THAT NONE OF THESE PARTIES CONFIR MED THE TRANSACTIONS WITH THE ASSESSEE. THE LETTERS SENT TO THEM WERE RECEIVED BACK EITHER FOR THE REASON THAT THE ADDRESSE S WERE INCOMPLETE OR THE PARTY HAD LEFT THE PREMISE OR THE PERSON IS NOT TRACEABLE. ONE PARTY M/S VANDANA INTERNATIONAL EXPORTS COMPLETELY DENIED ANY TRANSACTION WITH THE APPELLANT . THIS GOES TO SHOW THAT THE SALES ARE NOT VERIFIABLE IN R ESPECT OF THE ASSESSEE. I NOT CONVINCED WITH THE ARGUMENT OF THE LD. AR THAT THE ASSESSING OFFICER COULD ALTERNATIVELY ISSUE SUMMONS TO THE PARTIES FOR INQUIRY. IF THE PARTIES ARE NO T EXISTING ON THE GIVEN ADDRESSES OR THE ADDRESSES ARE INCOMPLETE O R THEY DID NOT COMPLY WITH THE NOTICES FOR ANY OTHER REASON , HOW THEY WILL COMPLY WITH OTHER NOTICES. EVEN NO SPOT V ERIFICATION IS POSSIBLE ON THE GIVEN FACTS. EVEN THE ASSESSEE C OULD NOT PRODUCE, THE DEBTORS BEFORE THE ASSESSING OFFICER FOR ITA NO. 7376/DEL/2017 10 | P A GE VERIFICATION. THEN THE QUESTION ARISES WHAT MECHANI SM COULD THE ASSESSING OFFICER APPLY FOR THE VERIFICATION OF THE SALES MADE BY THE ASSESSEE. ON THESE FACTS. I AM QUITE SA TISFIED THAT THE PROVISIONS OF SECTION 145(3) ARE ATTRACTED IN THIS CASE BECAUSE THE ASSESSING OFFICER HAS PROVED THAT THE AC COUNTS OF THE ASSESSEE CANNOT BE ACCEPTED AS CORRECT OR COM PLETE. THE LD. ARS FOR THE APPELLANT HAVE DEMONSTRATED THE NE T PROFIT RATE OF 2.39% AND 3.65% IN THE CASE OF M/S KOTHARI PRODUCTS LIMITED AND M/S TIRUPATI FRAGRANCES LIMITED PERTAINING TO F.Y. 2012-13 RELEVANT FOR A.Y. 2013-1 4 RESPECTIVELY. OBVIOUSLY, THESE COMPANIES ARE MANUFA CTURERS AND THE MARGINS EARNED BY THEM CANNOT BE COMPARED WITH THAT OF A WHOLE SELLER OF THE PRODUCTS. BUT EVEN TH E ASSESSEE HAS NOT GIVEN ANY COMPARISON OF THE GROSS PROFIT RA TES EARNED BY OTHER WHOLE SELLERS IN THE BUSINESS OF THE TRADI NG OF TOBACCO. THEN I FIND THAT THE ASSESSING OFFICER WAS QUITE JUSTIFIED IN TALCING THE GP RATE OF 2% ON THE GROSS SALES DECLARED, BY THE ASSESSEE. IT IS ALSO TO BE REMARKED H ERE ITSELF THAT THE ONLY PARTY WHICH REPLIED THE NOTICE OF THE ASSESSING OFFICER DENIED ANY TRANSACTION, WITH THE A SSESSEE. ON THESE FACTS AND IN THE CIRCUMSTANCES, IT IS HELD T HAT THE SALES FIGURES DECLARED BY THE ASSESSEE ARE NOT RELIAB LE AT ALL. IN THE. ABSENCE OF REBUTTAL BY THE LD. ARS FOR THE A PPELLANT BY GIVING COMPARATIVE CASES SHOWING THE PROFIT IN T HE RANGE SHOWN BY THE ASSESSEE, I DO NOT HAVE ANY BASIS TO I NTERFERE WITH THE ORDER OF THE ASSESSING OFFICER. THOUGH THE COMPARISON OF THE MANUFACTURERS WITH THE ASSESSEE M AY NOT BE SO GOOD FOR THE REASON THAT TWO ACTIVITIES ARE DI FFERENT, THE PROFITS SHOWN BY HIM SHOW SOME INDICATION IN THIS L INE OF BUSINESS. GENERALLY, THE PROFIT MARGIN IN THIS LINE OF BUSINESS IS HIGHER THAN ONE SHOWN BY THE MANUFACTURER. BASED ON THE ABOVE FACTS AND FIGURES, I UPHOLD THE DECISION OF TH E ASSESSING OFFICER AND CONFIRM THE CONSEQUENTIAL ADD ITION OF RS. 1,44,13,587/-. ALL THE GROUNDS ARE DECIDED ACCORD INGLY. (CONFIRMED : RS.1,44,13,587/-) 7. IN THE RESULT, THE APPEAL IS DISMISSED. 6. BEING AGGRIEVED BY THE AFORESAID ORDER OF THE L D. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 7376/DEL/2017 11 | P A GE 7. WE HAVE HEARD THE RIVAL CONTENTION AND GONE THR OUGH THE RECORD. IT IS TO BE NOTED THAT IN THIS CASE, T HE ASSESSEE HAS SHOWN VERY LESS PROFIT AS AGAINST HUGE TURNOVER. NOT ICES WERE SENT TO THE PARTIES TO VERIFY THE PURCHASES/SALES. NOTICES WERE ALSO ISSUED TO THE SUNDRY DEBTORS AND CREDITORS. N ONE OF THE SUNDRY DEBTORS CONFIRMED THE TRANSACTIONS. EVEN, M OST OF THE NOTICES WERE RECEIVED WITH REPORT OF THE POSTAL AUTH ORITY NO SUCH FIRM. EVEN ONE OF THE PARTY NAMELY VANDANA IN TERNATIONAL EXPORT (JAIPUR) HAS CATEGORICALLY DENIED ANY KIND O F FINANCIAL OR TRADE TRANSACTION WITH THE ASSESSEE. UNDER SUCH CIRC UMSTANCES, IN OUR VIEW, THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS WAS JUSTIFIED. FURTHER, THOUGH THE RE WAS NO COMPARATIVE DATA AVAILABLE REGARDING THE GROSS PROF IT IN RESPECT OF WHOLESALERS IN TOBACCO PRODUCTS, HOWEVER, THE ASS ESSING OFFICER HAD OBSERVED THAT IN CASE OF MANUFACTURERS NAMELY MS/ KOTHARI PRODUCTS LIMITED, ITS MARGIN WAS 2.39%. IN CASE OF M/S TIRUPATI FRAGRANCES LIMITED PERTAINING TO FINANCIAL YEAR 2012- 13, ITS MARGIN WAS 3.69%. HOWEVER, THE ASSESSEE DID NOT PROVIDE ANY COMPARATIVE DATA IN RESPECT OF WHOLESALE R OF THE TOBACCO PRODUCTS. CONSIDERING THE PROFIT RATE OF TH E ITA NO. 7376/DEL/2017 12 | P A GE MANUFACTURERS, THE ASSESSING OFFICER ESTIMATED THE GROSS PROFIT RATE OF 2% ON THE GROSS SALES DECLARED. THE LD. CIT (A) HAS ALSO ELABORATELY DISCUSSED AND JUSTIFIED THE ACTION OF T HE ASSESSING OFFICER FOR WHICH WE DO NOT FIND ANY REASON TO INTERF ERE WITH. AT THIS STAGE, THE LD. COUNSEL FOR THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE MAY BE GIVEN THE DEDUCTION OF THE STAT UTORY TAXES PAID /CST. WE DO NOT FIND ANY JUSTIFICATION IN THI S RESPECT AS WHILE ESTIMATING THE GROSS PROFITS, ALL THE EXPENDIT URES INCLUDING THE TAXES PAID HAVE BEEN TAKEN INTO CONSIDERATION. THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE AND THE SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 01/1 0/2021. SD/- SD/- (R.K.PANDA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER F{X~{T F{X~{T F{X~{T F{X~{T COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS)