ACIT, CIR-44, KOLKATA, Kolkata V. Shri Shiw Binod Gupta, Kolkata

ITA 964/KOL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4756 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Assessment record
• Section: 143(3); 133A

Judgement Text

1 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI A. T. VARKEY, JM & M.BALAGANESH, AM] I.T.A. NO. 964/KOL/2015 ASSESSMENT YEAR: 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-44, KOLKATA VS. SHRI SHIV BINOD GUPTA PAN : AEBPG7907D APPELLANT RESPONDENT DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 29.10.2018. FOR THE APPELLANT SHRI SALLONG YADEN, ADDL. CIT, SR .DR FOR THE RESPONDENT SHRI SOUMITRA CHOUDHURY, ADVOCA TE ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-13, KOLKATA DATED 23.04.2015 FOR AY 2010-11. 2. GROUND NO.1 OF REVENUES APPEAL IS AGAINST THE A CTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS.31,90,000/- ON ACCOUNT OF CAPITA L INTRODUCTION FROM UNDISCLOSED SOURCES. 3. THE FIRST GROUND OF APPEAL OF REVENUE IS AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.31,90,000/- MADE BY THE AO ON ACCOUNT OF INTRODUCTION OF CAPITAL IN THE BOOKS OUT OF UNDISCLOSED SOURCES. BR IEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN TRADI NG OF DIFFERENT COMMODITIES. SURVEY OPERATIONS U/S 133A WAS CONDUCTED UPON THE ASSESSEE ON 04.02.2010 WHEREIN EVIDENCE 2 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 REGARDING SALES & PURCHASES MADE OUTSIDE THE BOOKS WAS FOUND. WITH REFERENCE TO THE MATERIAL FOUND IN THE COURSE OF SURVEY, THE ASSESSE E DECLARED ADDITIONAL INCOME OF RS.50,00,000/- WHICH WAS LATER ON REVISED TO RS.70, 00,000/- TOWARDS THE PROFIT DERIVED FROM SALES MADE OUTSIDE THE BOOKS OF ACCOUNTS AND T HE CIRCULATING CAPITAL INVOLVED IN SUCH BUSINESS. IN THE COURSE OF ASSESSMENT THE AO N OTED THAT THE ASSESSEE HAD CREDITED SUM OF RS.31,90,000/- BY WAY OF CAPITAL INTRODUCTIO N IN HIS PERSONAL BALANCE SHEET. WHEN CONFRONTED THE ASSESSEE EXPLAINED THAT BALANCE SHEET AS ON 31.03.2010 WAS PREPARED POST THE SURVEY AND HENCE THE SUCH INTRODU CTION OF CAPITAL INTER ALIA FORMED PART OF THE ADDITIONAL INCOME OF RS.70,00,000/- OFF ERED AT THE TIME OF SURVEY. ON FURTHER QUERY, THE ASSESSEE FURNISHED A DETAILED RECONCILIA TION STATEMENT ALONG WITH AN EXPLANATION. THE AO HOWEVER WAS NOT AGREEABLE TO TH E SAME AND ADDED BACK THE SAID SUM OF RS.31,90,000/- HOLDING THAT THE ASSESSEE WAS UNABLE TO SUBSTANTIATE ITS SOURCE. AGGRIEVED BY THE IMPUGNED ADDITION, THE ASSESSEE PR EFERRED APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS FO LLOWS: APPELLANTS SUBMISSION AND FACTS ON RECORD IS CARE FULLY CONSIDERED. ASSESSMENT RECORD WAS CALLED FOR AND VERIFIED. CASH BOOK PREPA RED POST SURVEY FOR HIS BUSINESS, AND PRODUCED BEFORE A.O. WAS ALSO PERUSED . N BEING ASKED TO CLARIFY THE REASON FOR INTRODUCING CASH IN SAVINGS BANK A/C ( W HICH IS TREATED AS PERSONAL A/C BY ASSESSEE) AND SUBSEQUENTLY TRANSFERRED TO CURREN T A/C ( THE A/C FOR HIS BUSINESS) ,IT WAS STATED THAT, THE BULK OF CASH ON SALES WAS BEING DEPOSITED IN HIS SAVINGS BANK A/C, IN ORDER TO AVOID CHARGES OF BANK , WHICH WAS IMPOSED ON DEPOSIT OF CASH BEYOND A LIMIT IN A DAY IN CURRENT ACCOUNT. TH E CASH OF BUSINESS DEPOSITED IN SAVINGS A/C WAS TREATED AS WITHDRAWAL FROM CAPITAL A/C OF THE PROPRIETOR. CASH IS BEING WITHDRAWN FROM BUSINESS AS DRAWINGS O F PROPRIETOR. IT IS BEING DEPOSITED IN PERSONAL SAVINGS A/C. THIS IS BEING DO NE TO AVOID DEPOSIT IN CURRENT A/C FOR WHICH THE BANK CHARGED SEPARATELY IF CASH D EPOSIT EXCLUDED A LIMIT. THEREFORE TO AVOID THE BANK CHARGES CASH WAS DEPOSI TED IN SAVINGS A/C AND SUBSEQUENTLY TRANSFERRED TO CURRENT ALE OF BUSINESS . IN THIS WAY TOTAL CASH DEPOSITED IN SAVINGS ALE WAS RS.1,36,10,000/-, WITHDRAWN FROM BUSINESS, AS REFLECTED IN CASH BOOK. HOWEVER A SUM OF RS.1 ,07,00,000/- WAS TRANSF ERRED FROM SAVINGS BANK A/C TO CURRENT A/C (MAINTAINED FOR BUSINESS ) OF THE AS SESSEE .THIS WAS TREATED AS DEPOSIT IN CAPITAL A/C. FURTHER SUBSEQUENT TO DISCL OSURE OF 70 LAKHS BY ASSESSEE POST SURVEY, RS. 61 LAKHS OUT OF IT WAS DEPOSITED I N CASH BOOK OF BUSINESS ON 3 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 10.02.2010 THE BALANCE OF CASH OF RS. 9 LAKHS WAS R ETAINED IN PERSONAL A/C. THEREFORE THE PERSONAL BALANCE SHEET INDICATES TOTA L SUM OF RS. 70 LAKHS (61 LAKHS DEPOSITED IN CASH BOOK OF BUSINESS + 9 LAKHS RETAIN ED THE PERSONAL A/C. ) . THAT IS WHY THE TOTAL UNDISCLOSED INCOME, INTRODUCED IN PER SONAL BALANCE SHEET IS RS. 70 LAKHS . AS REGARDS THE BUSINESS A/C OF PROPRIETARY BUSINESS ( SHIB BHANDAR ) IS CONCERNED, THE TOTAL INTRODUCTION TO BUSINESS CAPITAL A/C IS R S. 1.07 CRORES TRANSFERRED FROM PERSONAL SAVINGS A/C AS DISCUSSED EARLIER. FURTHER, A SUM OF RS. 61 LAKHS WAS TRANSFERRED TO PROPRIETARY BUSINESS, POST SURVEY BY DEPOSITING IN CASH BOOK OUT OF UNDISCLOSED INCOME. THEREFORE, THE TOTAL INTRODUCTI ON INTO BUSINESS CAPITAL A/C WAS RS. 1.07 CRORES + 0.61 CRORES = 1.68 CRORES. HOWEVE R, THE TOTAL WITHDRAWAL FROM BUSINESS CASH BOOK WHICH WAS DEPOSITED IN THE PERSO NAL SAVINGS BANK A/C, TO AVOID BANK CHARGES WAS RS. 1,36,10,000/- . THEREFORE, THE EXCESS OF DEPOSIT IN BUSINESS CAPITAL OF ASSESSEE OVER WITHDRAWAL WAS [ 1,68,00,0 001- - 1,36,10,000/-] = RS. 31,90,000/- . THIS HAS BEEN REFLECTED IN THE BUSINE SS BALANCE SHEET AS CAPITAL INTRODUCTION OF RS. 31,90,000/-. A.O. WHILE ANALYZING THERE FACTS HAS IN HIS ORDER I N FACT REVERSED THE SUBMISSION OF ASSESSEE BY TREATING MOVEMENT OF CASH FROM CASH BOO K SAVINGS A/C. AND SAVINGS A/C , TO CURRENT A/C IN THE REVERSE OF WHAT WAS EX PLAINED BY ASSESSEE. HE OUGHT TO HAVE EXAMINED THE CASH BOOK (EVEN THOUGH PREPARED P OST SURVEY) AND BANK A/C TO CROSS-CHECK EXAMINE THE SUBMISSIONS OF ASSESSEE. TH EREFORE TAKING INTO CONSIDERATION THE DISCLOSURE OR RS. 70 LAKHS MADE P OST SURVEY, ASSESSEE IS ABLE TO EXPLAIN THE ENTRIES IN PERSONAL BALANCE SHEET & BUS INESS BALANCE SHEET . THERE IS NO CONTRADICTION IN THEM AS INFERRED BY A.O, AS DIS CUSSED EARLIER. THEREFORE, NO ADDITION ON THIS HEAD WAS WARRANTED . THE APPEAL ON THIS GROUND IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS NOW IN APPEAL BEFORE US. THE LD. DR APPEARING ON BEHALF OF THE REVENUE R ELIED ON THE ORDER OF THE AO BUT WAS UNABLE TO POINT OUT ANY INFIRMITY IN THE ABOVE FINDINGS OF THE LD. CIT(A). AFTER GOING THROUGH THE FACTS AND MATERIAL ON RECORD, WE NOTE THAT THE IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD OFFERED INCOME OF RS.70,00,000/- I N THE COURSE OF SURVEY AS WELL AS THE RETURN OF INCOME. BEFORE THE AO IT WAS EXPLAINED TH AT THE SAID OFFER INTER ALIA INCLUDED CASH DISCLOSURE OF RS.61,00,000/- TOWARDS THE PROFI T DERIVED FROM SALES MADE OUTSIDE THE BOOKS OF ACCOUNTS AND THE CIRCULATING CAPITAL I NVOLVED THEREIN, WHICH WAS INTRODUCED IN THE CASH BOOK OF THE ASSESSEE POST CO MPLETION OF SURVEY. IT WAS SUBMITTED 4 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 THAT SUCH DISCLOSURE OF CAPITAL OF RS.61,00,000/- I NTER ALIA INCLUDED THE AMOUNT OF RS.31,90,000/- BY WAY OF CAPITAL INTRODUCTION IN TH E PERSONAL BALANCE SHEET OF THE ASSESSEE. A RECONCILIATION STATEMENT IN RESPECT THE REOF WAS FURNISHED AT THE TIME OF ASSESSMENT. BEFORE THE AO, THE ASSESSEE SUBMITTED T HAT THE CASH SALES MADE BY THE ASSESSEE ON BEHALF OF ITS PROPRIETORSHIP CONCERN WA S DEPOSITED IN HIS PERSONAL SAVINGS BANK ACCOUNT SO AS TO AVOID CHARGES LEVIED BY BANK ON DEPOSIT OF CASH BEYOND PRESCRIBED LIMIT IN CURRENT ACCOUNT. THE CASH DEPOS ITED IN THE PERSONAL SAVINGS ACCOUNT WOULD BE ACCOUNTED BY WAY OF WITHDRAWAL BY THE ASSE SSEE FROM THE PROPRIETORSHIP CONCERN AND THE TRANSFER OF FUNDS FROM THE PERSONAL SAVINGS ACCOUNT TO THE PROPRIETORSHIP CONCERNS CURRENT ACCOUNT WOULD BE T REATED AS INTRODUCTION OF CAPITAL BY THE ASSESSEE TO ITS PROPRIETORSHIP CONCERN. FROM TH E CASH FLOW STATEMENT FURNISHED BEFORE THE AO, WHICH IS ALSO AVAILABLE AT PAGE 17 O F THE PAPER BOOK; WE NOTE THAT THE TOTAL CASH DEPOSITED IN SAVINGS ACCOUNT I.E. WITHDR AWAL FROM THE PROPRIETORSHIP CONCERN WAS RS.1,36,10,000/-. ON THE OTHER HAND THE TOTAL C APITAL INTRODUCED DURING THE YEAR COMPRISED OF FUNDS OF RS.1,07,00,000/- TRANSFERRED FROM THE PERSONAL SAVINGS ACCOUNT TO THE PROPRIETORSHIP CONCERNS CURRENT ACCOUNT. TH ESE FACTS HAVE NOT BEEN DISPUTED BY THE AO. THE ASSESSEE THUS SUBMITTED THAT THE TOTAL CAPITAL INTRODUCED INTO THE PROPRIETORSHIP CONCERN THEREFORE COMPRISED OF RS.1, 07,00,000/- TRANSFERRED FROM PERSONAL SAVINGS ACCOUNTS AND THE CASH DISCLOSURE O F RS.61,00,000/- MADE IN THE COURSE OF SURVEY; AGGREGATING TO RS.1,68,00,000/-.ACCORDIN GLY THE NET DIFFERENCE BETWEEN THE CAPITAL INTRODUCED IN THE PROPRIETORSHIP CONCERN AN D CAPITAL WITHDRAWN FROM THE SAID CONCERN OF RS.39,10,000/- [1,68,00,000 1,36,10,00 0] WAS REFLECTED BY WAY OF ENTRY IN THE BOOKS OF ACCOUNTS AS CAPITAL INTRODUCTION INTO THE ASSESSEES PERSONAL BALANCE SHEET TO ENSURE THAT THE INCOME DISCLOSED IN THE COURSE O F SURVEY WAS CORRECTLY BROUGHT INTO THE REGULAR BOOKS OF ACCOUNTS. 5. AFTER GOING THROUGH THE ABOVE FACTS AND STATEMEN T, WE FIND THAT THE ASSESSEE HAD DULY RECONCILED AND EXPLAINED THE INTRODUCTION OF C APITAL OF RS.39,10,000/- IN HIS PERSONAL BALANCE SHEET AND THAT IT INDEED FORMED PA RT OF THE ADDITIONAL INCOME OF 5 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 RS.70,00,000/- DISCLOSED AT THE TIME OF SURVEY. THE LD. CIT(A) WAS THEREFORE RIGHT IN OBSERVING THAT ASSESSEE WAS ABLE TO EXPLAIN THE ENT RIES IN HIS BALANCE SHEET AND THAT THE ADDITION OF RS.39,10,000/- MADE BY THE AO WAS UNWAR RANTED. GROUND NO. 1 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 6. THE SECOND GROUND OF APPEAL OF THE REVENUE IS AG AINST THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION OF RS.25,70,949/- MADE ON ACCOUNT OF UNACCOUNTED TRANSPORTATION EXPENSES. FROM THE FACTS AS AVAILABL E ON RECORD, IT IS NOTED THAT THE IN THE SURVEY CONDUCTED AT THE ASSESSEES PREMISES U/S 133 A, EVIDENCE OF SALES & PURCHASES OUTSIDE THE BOOKS WAS FOUND. WITH REFERENCE TO SUCH BUSINESS CONDUCTED OUTSIDE THE REGULAR BOOKS, THE ASSESSEE HAD DISCLOSED PROFIT OF RS.70,00,000/-. IN THE COURSE OF ASSESSMENT THE AO HOWEVER REJECTED THE BOOKS OF ACC OUNTS AND ESTIMATED A HIGHER PROFIT THAN THE PROFIT DISCLOSED AND OFFERED TO TAX BY THE ASSESSEE. APART FROM ESTIMATING THE PROFITS, THE AO MADE SPECIFIC ADDITI ON OF RS.25,70,949/- ON ACCOUNT OF UNACCOUNTED TRANSPORTATION EXPENSES FOUND RECORDED IN THE MATERIAL IMPOUNDED IN THE COURSE OF SURVEY. ON APPEAL, THE LD. CIT(A) DELETED THE IMPUGNED ADDITION. AGGRIEVED BY THE LD. CITS ACTION, THE REVENUE IS NOW IN APPE AL BEFORE US. 7. AT THE TIME OF HEARING THE LD. DR VEHEMENTLY ARG UED THAT THE SPECIFIC ADDITIONS MADE BY THE ASSESSING OFFICER SHOULD BE CONFIRMED. ON THE CONTRARY, THE LD. AR OF THE ASSESSEE SUBMITTED THAT WHEN THE BOOKS OF ACCOUNT O F THE ASSESSEE ARE REJECTED AND THE GROSS PROFIT RATE IS ESTIMATED, NO OTHER ADDITIONS BY MAKING SPECIFIC DISALLOWANCE OF THE EXPENSES COULD BE MADE. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW . IT IS NOTED THAT THERE IS NO DISPUTE WITH REGARD TO THE REJECTION OF BOOKS OF ACCOUNTS. WE ARE OF THE CONSIDERED VIEW THAT WHEN THE GP RATE IS APPLIED BY REJECTING THE BOOKS RESULT, NO FURTHER ADDITION ON ACCOUNT OF ANY ITEM OF SPECIFIC EXPENSES ARE REQUIR ED TO BE MADE BECAUSE THE BOOKS OF 6 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 ACCOUNT COULD NOT BE RELIED FOR THE PURPOSE OF COMP LETING THE ASSESSMENT OF THE ASSESSEE AND IT IS FOR THAT REASON THAT THE AO HAS RESORTED TO ESTIMATION OF PROFIT EARNED BY THE ASSESSEE ON THE OVERALL SALES. WE FIND THAT THIS PROPOSITION IS DULY SUPPORTED BY THE FOLLOWING JUDGMENTS: - CIT VS. AGARWAL ENGG& CO. LTD (302 ITR 246) (P&H HC ) - CIT VS B.N. MUTTIN (388 ITR 608) (KAR HC) - INDWELL CONSTRUCTIONS VS. CIT (232 ITR 776) (AP HC) 9. CONSIDERING THE ABOVE DECISIONS AND THE FACTS OF THE CASE BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A)HO LDING THAT NO FURTHER ADDITIONS/ DISALLOWANCE ON ACCOUNT OF SPECIFIC ITEM OF EXPENSE S IS PERMISSIBLE WHEN THE GROSS PROFIT RATE OF GROSS RECEIPTS ARE APPLIED AFTER REJ ECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION . ACCORDINGLY, GROUND NO. 2 RAISED BY THE REVENUE IS HEREBY DISMISSED. 10. THE LAST GROUND OF APPEAL RAISED BY THE REVENUE IS AGAINST THE LD. CIT(A)S ACTION OF ESTIMATING THE GP RATE AT 1% INSTEAD OF 1 .5% AS ESTIMATED BY THE AO. BRIEFLY STATED, THE ASSESSEE IS A WHOLESALE DEALER OF VANAS PATI, MUSTARD OIL, SUGAR ETC. POST THE SURVEY U/S 133A, THE ASSESSEE HAD RE-DRAWN ITS BOOK S OF ACCOUNTS AND SUBMITTED THE RETURN OF INCOME ALONG WITH THE TAX AUDIT REPORT& A UDITED ACCOUNTS. IN THE COURSE OF ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE HAD C ARRIED OUT LARGE SCALE TRADES IN DIFFERENT COMMODITIES BUT WAS UNABLE TO PRODUCE THE STOCK REGISTERS SO AS TO ENABLE HIM TO VERIFY THE QUANTITATIVE RECORDS. THE AO FURTHER NOTED THAT THE PROFITABILITY OF DIFFERENT COMMODITIES VARIED AND HENCE IN ABSENCE O F STOCK REGISTER, IT WAS NOT POSSIBLE FOR HIM TO VERIFY THE TRADING RESULTS. FOR THE REAS ONS AS AFORESAID THE AO HELD THAT THE TRADING RESULTS AS REPORTED BY THE ASSESSEE WERE UN RELIABLE. HE THEREFORE INVOKED THE PROVISIONS OF SECTION 145(3) AND REJECTED THE BOOKS OF ACCOUNTS SUBMITTED BY THE ASSESSEE. THE AO WAS OF THE VIEW THAT THE GP RATE O F 0.88% REPORTED BY THE ASSESSEE 7 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 WAS ON THE LOWER SIDE AND HENCE ESTIMATED IT AT 1.5 0%. ACCORDINGLY HE MADE FURTHER ADDITION OF RS.42,81,400/- TO THE PROFITS OF THE AS SESSEE. AGGRIEVED THE ASSESSEE PREFERRED APPEAL AGAINST THE SAME BEFORE THE CIT(A) , WHO TAKING INTO ACCOUNT THE PAST HISTORY OF THE ASSESSEE AND THE FACTS OF THE CASE E STIMATED THE GP RATE OF 1%. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 11. AT THE TIME OF HEARING THE LD. DR VEHEMENTLY RE LIED ON THE ELABORATE REASONS SET OUT BY THE AO IN HIS ORDER REJECTING THE BOOKS OF A CCOUNTS AND ESTIMATING THE PROFIT AT 1.5%. THE LD. DR CONTENDED THAT THE ESTIMATION OF G P AT 1.5% BY THE AO WAS FAIR AND MET THE ENDS OF JUSTICE AND BE THEREFORE CONFIRMED. ON THE OTHER HAND, THE LD. AR PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). THE LD. AR POINTED OUT THAT THE AO HAS NOT GIVEN ANY COGENT REASONING FOR ESTIMATING THE P ROFIT AT 1.5%. HE SUBMITTED THAT THE MANNER OF ESTIMATION FOLLOWED BY THE AO WAS COMPLET ELY ADHOC & ARBITRARY. HE DREW OUR ATTENTION TO THE COMPARATIVE CHART PLACED AT PA GE 22 OF THE PAPER-BOOK AND SUBMITTED THAT THE GP RATE OF 0.88% REPORTED BY THE ASSESSEE IN THE RELEVANT YEAR WAS COMPARABLE TO THE GP RATE OF 0.80% AND 0.87% EARNED BY THE ASSESSEE IN EARLIER AYS 2008-09 & 2009-10 RESPECTIVELY AND IN THAT VIEW OF THE MATTER THE LD. CIT(A)S ACTION OF ESTIMATING THE GP RATE AT 1% WAS FAIR TO BOTH TH E PARTIES. THE LD. AR THUS PRAYED THAT THE ORDER OF LD. CIT(A) ON THIS ISSUE BE UPHEL D. 12. WE HAVE HEARD THE RIVAL CONTENTIONS & PERUSED T HE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE WITH REGAR D TO THE REJECTION OF BOOKS OF ACCOUNTS. THUS, THE LIMITED ISSUE BEFORE US RELATES TO THE ESTIMATION OF PROFIT IN THE EVENT OF REJECTION OF BOOKS OF ACCOUNTS. THE AO EST IMATED THE PROFIT @ 1.50% OF THE GROSS TURNOVER WHICH WAS REDUCED BY THE LD. CIT(A) TO 1% OF THE GROSS TURNOVER. WE NOTE THAT AO IN THE IMPUGNED HAS NOT ELABORATED THE REASONS FOR ADOPTING THE HIGHER PROFIT AS COMPARE TO THE EARLIER YEARS. WE ALSO FIN D THAT NO COMPARABLE CASES WERE BROUGHT ON RECORD BY THE AO FOR DETERMINING THE PRO FIT AT 1.5% ON ESTIMATED BASIS. 8 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 EVEN THE LD. DR WAS UNABLE TO JUSTIFY THE AOS BASI S FOR ARRIVING AT THE GROSS PROFIT RATE OF 1.5%. 13. ON THE OTHER HAND WE FIND FORCE IN THE LD. ARS CONTENTION THAT THE HISTORY OF THE ASSESSEE BECOMES VERY IMPORTANT ONCE THE PROFIT HAS TO BE DETERMINED ON ESTIMATED BASIS. IT IS NOTED THAT THE INCOME-TAX ASSESSMENTS FOR THE EARLIER YEARS WERE FRAMED U/S 143(3) AND IN THOSE YEARS THE TRADING RESULTS OF TH E ASSESSEE HAD BEEN ACCEPTED BY THE DEPARTMENT. FROM THE CHART SUBMITTED BEFORE US, WE FIND THAT THE ASSESSEE HAS DISCLOSED THE FAIR RATE OF GROSS PROFIT IN COMPARIS ON TO THE EARLIER YEARS. IN THE CIRCUMSTANCES THE PROFIT DECLARED BY THE ASSESSEE I N EARLIER YEARS CANNOT BE BRUSHED ASIDE FOR ESTIMATING THE PROFIT OF THE RELEVANT YEA R UNTIL AND UNLESS, THERE ARE CHANGES IN THE FACTS AND CIRCUMSTANCES OR THE AO BRINGS ANY RE SULTS OF COMPARABLE CASES TO JUSTIFY HIS ACTION, WHICH IS NOT THE CASE HERE IN HAND. THE LD. AR HAS POINTED OUT THAT THERE IS NO CHANGE IN THE MODUS OPERANDI OF THE BUSINESS AS WELL AS THE FACTS AND CIRCUMSTANCES AS COMPARED TO EARLIER ASSESSMENT YEARS. IN OUR CON SIDERED VIEW THEREFORE, WE FIND MERIT IN THE ACTION OF THE LD. CIT(A) IN ESTIMATING THE PROFIT AT 1% AFTER TAKING INTO CONSIDERATION THE PROFIT OF EARLIER YEARS DECLARED BY ASSESSEE. ACCORDINGLY, GROUND NO. 3 RAISED BY THE REVENUE IS HEREBY DISMISSED. 14. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER 2018 SD/- SD/- (M.BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29.10.2018. RG.(SR.P.S.) 9 ITA NO.964/KOL/2015 MR. SHIV BINOD GUPTA A.Y.2010-11 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT A.C.I.T., CIRCLE-44, KOLKATA. 2 RESPONDENT SHRI SHIW BINOD GUPTA. 3 . THE CIT(A)-13, KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER ASSTT. REGISTRAR . ITAT, KOLKATA BENCHES, KOLKATA