M/S JASMINE COMPUTECH PRIVATE LIMITED,MUMBAI V. DCIT-CIRCLE 4(3)(1), MUMBAI

ITA 5766/MUM/2024

AI Insights

The case involves M/s Jasmine Computech Pvt. Ltd., which appealed against the orders of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, for the assessment year 2012-13. The primary issues in the appeals included the estimation of profit at 3% of total turnover, disallowance of depreciation, and additions made on account of unexplained credits under Section 68 of the Income Tax Act, 1961. The Tribunal found that the Assessing Officer had not adequately verified the purchases and sales and had not considered comparable cases while estimating the profit rate. Consequently, the Tribunal remanded the matter for a detailed examination and fair assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471359 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH SAREEN
• Assessee Lawyers: SATYAPRAKASH SINGH
• Keywords: Additional evidence; Unexplained cash credit; Depreciation; Accommodation entries
• Section: 143(3); 32; 68; 133(6); 13; 145(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 5766/MUM/2024 Assessment Year: 2012-13 M/s Jasmine Computech Pvt. Ltd., SH-1, Building 2A Wing, Pooja Nagar, Cross Cabin Road, Bhayandar East, Thane, Mira Road S.O., Chimane, Thane-401107. Vs. DCIT Circle 4(3)(1), Mumbai-401107. PAN NO. AACCJ 3211 F Appellant Respondent ITA No. 5917/MUM/2024 Assessment Year: 2012-13 DCIT 649, Aayakar Bhavan M.K. Road, Mumbai-400020. Vs. M/s Jasmine Computech Pvt. Ltd., A 13 4th floor, Silver Oak, Bhatt Lane Poisar Borivali West, Mumbai-400092. PAN NO. AACCJ 3211 F Appellant Respondent Assessee by : Mr. Satyaprakash Singh Revenue by : Mr. Manish Sareen, CIT-DR Date of Hearing : 12/02/2025 Date of pronouncement : 14/02/2025 PER OM PRAKASH KANT, AM These cross appeals by the assessee and the Revenue are directed against order dated 18.09.2024 passed by the Ld. Commissioner of Income Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012 13. 2. The grounds raised by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A)/ National Faceless AppealRs. 2, Centre has erred in estimating the profit at Rs 8,21,88,893/ same as 3% of total turnover (out of which the tax has already been offered on profit of Rs. 4,32,488/ and the disputed profit is of Rs. 8,17,56,405/ prays that the said disallowance may please be deleted. 2. On the facts and in the circumstances of the case and the Hon' ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing on account of deprecation claim U/s 32 of the Act Rs.63,07,446/ appellant prays t deleted 3. On the facts and in the circumstances of the case and the Hon'ble CIT(A) / National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing Rs. 7,14,90,183 / Act. The appellant prays that the said disallowance may please be deleted 4. On the facts and circumstances of the case and law the Nil Hon'ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the deci proceedings u/s 271(1) (c) of the Income Tax Act, 1961. M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 ORDER PER OM PRAKASH KANT, AM These cross appeals by the assessee and the Revenue are directed against order dated 18.09.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012 grounds raised by the assessee are reproduced as under: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A)/ National Faceless AppealRs. 2, Centre has erred in estimating the profit at Rs 8,21,88,893/- by treating the as 3% of total turnover (out of which the tax has already been offered on profit of Rs. 4,32,488/- in the Income Tax Return and the disputed profit is of Rs. 8,17,56,405/-) The appellant prays that the said disallowance may please be deleted. ts and in the circumstances of the case and the Hon' ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing on account of deprecation claim U/s 32 of the Act Rs.63,07,446/ appellant prays that the said disallowance may please be 3. On the facts and in the circumstances of the case and the Hon'ble CIT(A) / National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing Rs. 7,14,90,183 / - on account of unexplained Credit U/s 68 of the Act. The appellant prays that the said disallowance may please 4. On the facts and circumstances of the case and law the Nil Hon'ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in initiating penalty proceedings u/s 271(1) (c) of the Income Tax Act, 1961. M/s Jasmine Computech Pvt. Ltd. 2 ITA No. 5766 & 5917/MUM/2024 These cross appeals by the assessee and the Revenue are directed against order dated 18.09.2024 passed by the Ld. National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012- grounds raised by the assessee are reproduced as under: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A)/ National Faceless AppealRs. 2, Centre has by treating the as 3% of total turnover (out of which the tax has already in the Income Tax Return ) The appellant prays that the said disallowance may please be deleted. ts and in the circumstances of the case and in law, the Hon' ble CIT(A)/ National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing on account of deprecation claim U/s 32 of the Act Rs.63,07,446/-. The hat the said disallowance may please be 3. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) / National Faceless Appeal Centre has erred in upholding the decision of the Ld.AO in disallowing Rs. ount of unexplained Credit U/s 68 of the Act. The appellant prays that the said disallowance may please 4. On the facts and circumstances of the case and law the Nil Hon'ble CIT(A)/ National Faceless Appeal Centre has erred in initiating penalty proceedings u/s 271(1) (c) of the Income Tax Act, 1961. 2.1 The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and circumstances of the case, Ld. CIT(A) was justified in restricting turnover as against the 5% even though the assessee was not able to prove the purchase made during the year under consideration. 2. Whether on the facts and circumstances of the case, Ld. CIT(A) was justified in restrictin turnover as against the 5% even though the business of the assessee is asset light and high margin business. 3. Briefly stated, facts of the case are that consideration, the assessee company was eng of trading of computer software. The assessee filed return of income declaring total loss of Rs.44,87,566/ the assessee was selected for scrutiny assessment and statutory notices under the Income issued and complied with. In the course of assessment proceedings, the Assessing Officer made inquiries from the purchase parties recorded in books of account of assessee observation, he rejected th section 145(3) of the Act and estimated the gross profit at 5% of the total turnover of Rs.273,96,29,755/ Rs.13,69,81,487/- and after subtracting the gross profit at Rs.4,32,488/- shown by th Rs.13,65,48,999/- was made. Further, the Assessing Officer disallowed depreciation on the fixed asset i.e. computer and software amounting to Rs.63,07,446/ of the fixed assets by field inspector M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and circumstances of the case, Ld. CIT(A) was justified in restricting the estimation of profit at 3% of turnover as against the 5% even though the assessee was not able to prove the purchase made during the year under consideration. 2. Whether on the facts and circumstances of the case, Ld. CIT(A) was justified in restricting the estimation of profit at 3% of turnover as against the 5% even though the business of the assessee is asset light and high margin business. Briefly stated, facts of the case are that during the year under the assessee company was engaged in the business of trading of computer software. The assessee filed return of income declaring total loss of Rs.44,87,566/-. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the course of assessment proceedings, the Assessing Officer made inquiries from the purchase parties books of account of assessee , but in view of adverse rejected the book profit of the assessee invoking section 145(3) of the Act and estimated the gross profit at 5% of the total turnover of Rs.273,96,29,755/-, which was worked out to and after subtracting the gross profit at shown by the assessee, was made. Further, the Assessing Officer disallowed depreciation on the fixed asset i.e. computer and software amounting to Rs.63,07,446/- in absence of the verification by field inspector . The Assessing Officer further M/s Jasmine Computech Pvt. Ltd. 3 ITA No. 5766 & 5917/MUM/2024 The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and circumstances of the case, Ld. CIT(A) the estimation of profit at 3% of turnover as against the 5% even though the assessee was not able to prove the purchase made during the year under 2. Whether on the facts and circumstances of the case, Ld. CIT(A) g the estimation of profit at 3% of turnover as against the 5% even though the business of the during the year under aged in the business of trading of computer software. The assessee filed return of income . The return of income filed by the assessee was selected for scrutiny assessment and statutory , 1961 (in short ‘the Act’) were issued and complied with. In the course of assessment proceedings, the Assessing Officer made inquiries from the purchase parties , but in view of adverse e book profit of the assessee invoking section 145(3) of the Act and estimated the gross profit at 5% of the which was worked out to and after subtracting the gross profit at addition of was made. Further, the Assessing Officer disallowed depreciation on the fixed asset i.e. computer and in absence of the verification e Assessing Officer further made addition of Rs.7,14,90,183/ appearing in bank statement/books of account of the Act. In this manner, the Assessing Officer assessed the total income of the assessee 143(3) on 27.03.2015. On further appeal, the Ld. CIT(A) reduced the gross profit rate from 5% to 3% but sustained the other two additions on account of unexplained credit in Revenue are in appeal, raising the reproduced above. 4. The ground No. 1 Nos. 1 and 2 of the appeal of the Revenue are therefore, all these grounds are taken 4.1 Brief facts qua the issue in dispute are that the Assessing Officer observed sales gross profit of Rs.4,32,488/ rate of 0.016%. Therefore, the Assessing Officer carried out inquiries in respect of purchase purchase and sale parties has been reproduced by the Assessing Officer on page 2 of the assessment order. The Assessing Officer issued notices u/s 133(6) of the Act for verification of the purchase/sales carried out by the assessee. The Assessing Officer noticed that three purchase parties and three sales parties located on the same address i.e. 801, Balarama, Bandra Kurla M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 made addition of Rs.7,14,90,183/- on account of unexplaine bank statement/books of account, invoking section 68 of the Act. In this manner, the Assessing Officer assessed the total of the assessee at Rs.20,98,59,060/- in order passed u/s 143(3) on 27.03.2015. On further appeal, the Ld. CIT(A) reduced the gross profit rate from 5% to 3% but sustained the other two additions on account of disallowance of depreciation and in toto. Aggrieved, both the assessee and the Revenue are in appeal, raising the respective he ground No. 1 of the appeal of the assessee and t . 1 and 2 of the appeal of the Revenue are grounds are taken up together for adjudication. Brief facts qua the issue in dispute are that the Assessing sales turnover of Rs.273.96 crores but noticed gross profit of Rs.4,32,488/- only, which resulted in gross profit 6%. Therefore, the Assessing Officer carried out inquiries in respect of purchases and sales parties. A list of the purchase and sale parties has been reproduced by the Assessing Officer on page 2 of the assessment order. The Assessing Officer es u/s 133(6) of the Act for verification of the purchase/sales carried out by the assessee. The Assessing Officer noticed that three purchase parties and three sales parties located on the same address i.e. 801, Balarama, Bandra Kurla M/s Jasmine Computech Pvt. Ltd. 4 ITA No. 5766 & 5917/MUM/2024 on account of unexplained credit invoking section 68 of the Act. In this manner, the Assessing Officer assessed the total in order passed u/s 143(3) on 27.03.2015. On further appeal, the Ld. CIT(A) reduced the gross profit rate from 5% to 3% but sustained the other two depreciation and eved, both the assessee and the respective grounds as of the appeal of the assessee and the ground . 1 and 2 of the appeal of the Revenue are interconnected, together for adjudication. Brief facts qua the issue in dispute are that the Assessing of Rs.273.96 crores but noticed which resulted in gross profit 6%. Therefore, the Assessing Officer carried out and sales parties. A list of the purchase and sale parties has been reproduced by the Assessing Officer on page 2 of the assessment order. The Assessing Officer es u/s 133(6) of the Act for verification of the purchase/sales carried out by the assessee. The Assessing Officer noticed that three purchase parties and three sales parties were located on the same address i.e. 801, Balarama, Bandra Kurla Complex, Bandra East, Mumbai. The Assessing Officer noticed that notices issued u/s 133(6) of the Act had been returned in case of few parties and the few parties did not comply to the notices issued. Thereafter, the Assessing Officer issued summon u/s 131 of the Act to the Director of the assessee c requested to produce purchase vouchers, details of assets fixed etc. but despite various opportunities books of accounts were not produced before the Assessing Officer. The Assessing Officer thereafter further asked the authorized representative of the assessee to explain whether the software was licensed or pirated or stand alone or online software He also enquired whether customers and who provided but in view of non-compliance production of the books of accounts, the Asse the book results of the assessee and invoking Act, estimated the profit which was computed at Rs.13,69,81,487/ assessee filed certain additional evidence Income-tax Rules, 1962 including the assessment order for subsequent assessment years and reply of the notices issued u/s 133(6) in the subsequent assessment year 2013 called for the remand report from the Assessing Officer and after taking into consideration rejoinder of the assessee, estimation of gross profit M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 East, Mumbai. The Assessing Officer issued u/s 133(6) of the Act had been returned in case of few parties and the few parties did not comply to the notices issued. Thereafter, the Assessing Officer issued summon u/s 131 of the Act to the Director of the assessee c duce books of accounts along with sales and purchase vouchers, details of assets fixed etc. but despite various opportunities books of accounts were not produced before the Assessing Officer. The Assessing Officer thereafter further asked the presentative of the assessee to explain whether the software was licensed or pirated or stand alone or online software also enquired whether who provided ‘after sale’ services to customers and who provided guarantee/warranty to the customers compliance on the part of the assessee production of the books of accounts, the Assessing Officer rejected of the assessee and invoking section 143(3) of the estimated the profit at the rate of 5% of the total turnov which was computed at Rs.13,69,81,487/-. On further appeal, the assessee filed certain additional evidences under Rule 46A of the tax Rules, 1962 including the assessment order for subsequent assessment years and reply of the notices issued u/s 133(6) in the subsequent assessment year 2013-14. The Ld. CIT(A) called for the remand report from the Assessing Officer and after taking into consideration rejoinder of the assessee, profit rate to 3% as against 5% estim M/s Jasmine Computech Pvt. Ltd. 5 ITA No. 5766 & 5917/MUM/2024 East, Mumbai. The Assessing Officer further issued u/s 133(6) of the Act had been returned in case of few parties and the few parties did not comply to the notices issued. Thereafter, the Assessing Officer issued summon u/s 131 of the Act to the Director of the assessee company and books of accounts along with sales and purchase vouchers, details of assets fixed etc. but despite various opportunities books of accounts were not produced before the Assessing Officer. The Assessing Officer thereafter further asked the presentative of the assessee to explain whether the software was licensed or pirated or stand alone or online software. who provided ‘after sale’ services to to the customers on the part of the assessee and non- ssing Officer rejected section 143(3) of the 5% of the total turnover, . On further appeal, the under Rule 46A of the tax Rules, 1962 including the assessment order for subsequent assessment years and reply of the notices issued u/s 14. The Ld. CIT(A) called for the remand report from the Assessing Officer and after taking into consideration rejoinder of the assessee, he reduced the 3% as against 5% estimated by the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: “I have perused facts of the case, assessment order of the AO, submission of the appellant, the remand report of the AO, cross reply of the appellant on the reman available on record. On perusal of the record, it is seen that the addition made is in respect of estimated profit of Rs. 13,65,48,999/ income. On perusal of the submissions and the documents filed during appellate engaged in business of trading in software, information technology & IT enabled services. During the year under consideration the assessee has done mainly software trading. The contention of appellant is th trading. The appellant has not been able to explain as to why the books of account were not produced before the AO, for verification. The AO, has in the assessment order given a categorical observation that o kurla complex Bandra east, Mumbai is common for the four parties out of total 5 parties to whom sale is made and three parties to from whom purchase is made also happen to be same parties, having the same addr appellant viz during the assessment proceedings in A.Y 2013 that each A. Y is independent A. Y and service of the notices in subsequent year does not c in the A. Y under consideration. From the above, it is clear that the appellant did not produce the books of account, the purchases and sales remained the case that the a small residential flat, which is occupied by the family as well and that there can not be any place left to accommodate computers worth more than Rs 40 lakh and any employees in that place. However the AO the profit. I am of the view that the estimation of profit at 3% would be reasonable in view of the facts and circumstance of the case. Accordingly the AO is directed to estimate the profits at 3% and reduce the addition, accordingly. Thus the ground of appeal is partly allowed 4.2 We have carefully considered the rival submissions advanced by the parties and have meticulously examined the material placed M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: I have perused facts of the case, assessment order of the AO, submission of the appellant, the remand report of the AO, cross reply of the appellant on the remand report and the documents available on record. On perusal of the record, it is seen that the addition made is in respect of estimated profit of Rs. 13,65,48,999/- as business On perusal of the submissions and the documents filed during appellate proceedings, it is observed that the appellant is engaged in business of trading in software, information technology & IT enabled services. During the year under consideration the assessee has done mainly software trading. The contention of appellant is that profit margin is very low in the business of trading. The appellant has not been able to explain as to why the books of account were not produced before the AO, for verification. The AO, has in the assessment order given a categorical observation that on one specific address ie. 801 Balaram Bandra, kurla complex Bandra east, Mumbai is common for the four parties out of total 5 parties to whom sale is made and three parties to from whom purchase is made also happen to be same parties, having the same address. As regards the submission of the appellant viz-a-viz the notices u/s 133(6) having been served during the assessment proceedings in A.Y 2013-14, it is observed that each A. Y is independent A. Y and service of the notices in subsequent year does not change and effect the conclusion drawn A. Y under consideration. From the above, it is clear that the appellant did not produce the books of account, the purchases and sales remained unverified and also the peculiar circumstance of the case that the appellant is stated to be doing the business from a small residential flat, which is occupied by the family as well and that there can not be any place left to accommodate computers worth more than Rs 40 lakh and any employees in that place. However the AO's order is silent on the basis of estimating the profit. I am of the view that the estimation of profit at 3% would be reasonable in view of the facts and circumstance of the case. Accordingly the AO is directed to estimate the profits at 3% and e addition, accordingly. Thus the ground of appeal is partly allowed.” We have carefully considered the rival submissions advanced by the parties and have meticulously examined the material placed M/s Jasmine Computech Pvt. Ltd. 6 ITA No. 5766 & 5917/MUM/2024 Assessing Officer. The relevant finding of the Ld. CIT(A) is I have perused facts of the case, assessment order of the AO, submission of the appellant, the remand report of the AO, cross d report and the documents On perusal of the record, it is seen that the addition made is in as business On perusal of the submissions and the documents filed proceedings, it is observed that the appellant is engaged in business of trading in software, information technology & IT enabled services. During the year under consideration the assessee has done mainly software trading. The contention of at profit margin is very low in the business of trading. The appellant has not been able to explain as to why the books of account were not produced before the AO, for verification. The AO, has in the assessment order given a categorical n one specific address ie. 801 Balaram Bandra, kurla complex Bandra east, Mumbai is common for the four parties out of total 5 parties to whom sale is made and three parties to from whom purchase is made also happen to be same parties, ess. As regards the submission of the viz the notices u/s 133(6) having been served 14, it is observed that each A. Y is independent A. Y and service of the notices in hange and effect the conclusion drawn A. Y under consideration. From the above, it is clear that the appellant did not produce the books of account, the purchases and unverified and also the peculiar circumstance of appellant is stated to be doing the business from a small residential flat, which is occupied by the family as well and that there can not be any place left to accommodate computers worth more than Rs 40 lakh and any employees in that 's order is silent on the basis of estimating the profit. I am of the view that the estimation of profit at 3% would be reasonable in view of the facts and circumstance of the case. Accordingly the AO is directed to estimate the profits at 3% and e addition, accordingly. Thus the ground of appeal is We have carefully considered the rival submissions advanced by the parties and have meticulously examined the material placed on record. The assessee contends that the trading of so been carried out consistently, and in subsequent years, the Assessing Officer had issued notices under Section 133(6) of the Act, which were duly served upon and complied with by the relevant parties. It is further submitted that, in view of the business operations, the gross profit rate applied by the Assessing Officer in the assessment year 2013 year under consideration as well. On the contrary, the learned Departmental Representative (DR) has argued purchase transactions nor the sales transactions of the assessee have been verified. It has been contended that the assessee is engaged in accommodation entries with the intent to evade tax, and therefore, the entire purchase amount shoul careful consideration, we find that the Assessing Officer has not disallowed the entire purchases but has instead rejected the books of accounts and estimated the gross profit from the trading activity. Furthermore, the assessee has n Section 145(3) of the Act but has only challenged the gross profit rate of 3% as sustained by the Learned Commissioner of Income Tax (Appeals) [CIT(A)], while the Revenue is aggrieved by the reduction of the gross profit rate considered view that the estimation of the gross profit rate must be based on sound reasoning and comparable cases within the same or similar business. The authorities below have arrived at their respective estimations without cit M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 on record. The assessee contends that the trading of so been carried out consistently, and in subsequent years, the Assessing Officer had issued notices under Section 133(6) of the Act, which were duly served upon and complied with by the relevant parties. It is further submitted that, in view of the business operations, the gross profit rate applied by the Assessing Officer in the assessment year 2013-14 ought to be applied to the year under consideration as well. On the contrary, the learned Departmental Representative (DR) has argued that neither the purchase transactions nor the sales transactions of the assessee have been verified. It has been contended that the assessee is engaged in accommodation entries with the intent to evade tax, and therefore, the entire purchase amount should be disallowed. Upon careful consideration, we find that the Assessing Officer has not disallowed the entire purchases but has instead rejected the books of accounts and estimated the gross profit from the trading activity. Furthermore, the assessee has not contested the invocation of Section 145(3) of the Act but has only challenged the gross profit rate of 3% as sustained by the Learned Commissioner of Income Tax (Appeals) [CIT(A)], while the Revenue is aggrieved by the reduction of the gross profit rate from 5% to 3%. It is our considered view that the estimation of the gross profit rate must be based on sound reasoning and comparable cases within the same or similar business. The authorities below have arrived at their respective estimations without citing any comparable instances to M/s Jasmine Computech Pvt. Ltd. 7 ITA No. 5766 & 5917/MUM/2024 on record. The assessee contends that the trading of software has been carried out consistently, and in subsequent years, the Assessing Officer had issued notices under Section 133(6) of the Act, which were duly served upon and complied with by the relevant parties. It is further submitted that, in view of the consistency in business operations, the gross profit rate applied by the Assessing 14 ought to be applied to the year under consideration as well. On the contrary, the learned that neither the purchase transactions nor the sales transactions of the assessee have been verified. It has been contended that the assessee is engaged in accommodation entries with the intent to evade tax, and d be disallowed. Upon careful consideration, we find that the Assessing Officer has not disallowed the entire purchases but has instead rejected the books of accounts and estimated the gross profit from the trading activity. ot contested the invocation of Section 145(3) of the Act but has only challenged the gross profit rate of 3% as sustained by the Learned Commissioner of Income Tax (Appeals) [CIT(A)], while the Revenue is aggrieved by the from 5% to 3%. It is our considered view that the estimation of the gross profit rate must be based on sound reasoning and comparable cases within the same or similar business. The authorities below have arrived at their ing any comparable instances to justify their determination of the gross profit rate. In the absence of such a basis, it is imperative that the matter be remanded to the Assessing Officer for the limited purpose of reassessing the gross profit rate. The Assessing Officer shall take into consideration comparable cases of entities engaged in software trading during the relevant assessment year. Additionally, if deemed necessary, the Assessing Officer may also examine the gross profit rates declared by the assessee in preceding and succeeding assessment years to ensure a just and equitable determination. Accordingly, the matter stands remitted to the file of the Assessing Officer for reconsideration in the light of the observations made hereinabove. Accordingly, the ground No. 1 of the appeal of the assessee and ground Nos. 1 and 2 statistical purposes. 5. In ground No. 2 account of depreciation of Rs.63,07,44 Upon due consideration of the material on record, it is observed that the Learned Assessing Officer has noted that during verification conducted by the Inspector of the Department, the fixed assets of the assessee could not be duly Assessing Officer has expressed skepticism regarding the feasibility of the assessee's business operations being conducted from his residential premises under normal circumstances. Before us, learned counsel for the assessee has M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 justify their determination of the gross profit rate. In the absence of such a basis, it is imperative that the matter be remanded to the Assessing Officer for the limited purpose of reassessing the gross sessing Officer shall take into consideration comparable cases of entities engaged in software trading during the relevant assessment year. Additionally, if deemed necessary, the Assessing Officer may also examine the gross profit rates declared essee in preceding and succeeding assessment years to ensure a just and equitable determination. Accordingly, the matter stands remitted to the file of the Assessing Officer for reconsideration in the light of the observations made hereinabove. Accordingly, the ground No. 1 of the appeal of the assessee and and 2 of the appeal of the Revenue 2 of the appeal of the assessee disallowance on account of depreciation of Rs.63,07,446/- has been challenged. Upon due consideration of the material on record, it is observed that the Learned Assessing Officer has noted that during verification conducted by the Inspector of the Department, the fixed assets of the assessee could not be duly verified. Furthermore, the Assessing Officer has expressed skepticism regarding the feasibility of the assessee's business operations being conducted from his residential premises under normal circumstances. Before us, learned counsel for the assessee has submitted that the assessee is M/s Jasmine Computech Pvt. Ltd. 8 ITA No. 5766 & 5917/MUM/2024 justify their determination of the gross profit rate. In the absence of such a basis, it is imperative that the matter be remanded to the Assessing Officer for the limited purpose of reassessing the gross sessing Officer shall take into consideration comparable cases of entities engaged in software trading during the relevant assessment year. Additionally, if deemed necessary, the Assessing Officer may also examine the gross profit rates declared essee in preceding and succeeding assessment years to ensure a just and equitable determination. Accordingly, the matter stands remitted to the file of the Assessing Officer for reconsideration in the light of the observations made hereinabove. Accordingly, the ground No. 1 of the appeal of the assessee and of the appeal of the Revenue are allowed for of the appeal of the assessee disallowance on has been challenged. Upon due consideration of the material on record, it is observed that the Learned Assessing Officer has noted that during verification conducted by the Inspector of the Department, the fixed verified. Furthermore, the Assessing Officer has expressed skepticism regarding the feasibility of the assessee's business operations being conducted from his residential premises under normal circumstances. Before us, submitted that the assessee is willing to furnish all relevant documentary evidence in support of the existence of fixed assets, including bills, vouchers, installation reports, and records of electricity consumption. In light of this submission, it has been prayed that the matter be remanded to the file of the Assessing Officer for fresh verification. Having regard to the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit the matter to the Assessing Officer for reconsideration. The Assessing Officer shall conduct a fresh adjudication after affording the assessee an opportunity to produce documentary evidence substantiating the existence and installation of the fixed assets in question. The Assessing Officer shall verify such evidence in accordance with law and pass an order afresh on merits. The ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purpose. 6. In ground No. Rs.7,14,90,183/- on account of unexplained credit. examination of the material on record, it is observed that the Learned Assessing Officer has taken note of the assessee’s trade payables amounting to amounting to ₹73,74,24,069/ verification, determined the maximum outstanding balance as on 14.11.2011 at ₹7,14,90,183/ balance of the account and the fund requirement for running the business. Consequently, M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 willing to furnish all relevant documentary evidence in support of the existence of fixed assets, including bills, vouchers, installation reports, and records of electricity consumption. In light of this een prayed that the matter be remanded to the file of the Assessing Officer for fresh verification. Having regard to the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit the matter to the Assessing r for reconsideration. The Assessing Officer shall conduct a fresh adjudication after affording the assessee an opportunity to produce documentary evidence substantiating the existence and installation of the fixed assets in question. The Assessing Officer shall verify such evidence in accordance with law and pass an order afresh on merits. The ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purpose. In ground No. 3, the assessee has challenged addition of on account of unexplained credit. examination of the material on record, it is observed that the Learned Assessing Officer has taken note of the assessee’s trade payables amounting to ₹78,72,61,334/- and trade receivables ,74,24,069/-. The Assessing Officer, after verification, determined the maximum outstanding balance as on 7,14,90,183/-, which was considered as the peak balance of the account and the fund requirement for running the business. Consequently, the Assessing Officer treated the peak M/s Jasmine Computech Pvt. Ltd. 9 ITA No. 5766 & 5917/MUM/2024 willing to furnish all relevant documentary evidence in support of the existence of fixed assets, including bills, vouchers, installation reports, and records of electricity consumption. In light of this een prayed that the matter be remanded to the file of the Assessing Officer for fresh verification. Having regard to the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit the matter to the Assessing r for reconsideration. The Assessing Officer shall conduct a fresh adjudication after affording the assessee an opportunity to produce documentary evidence substantiating the existence and installation of the fixed assets in question. The Assessing Officer shall verify such evidence in accordance with law and pass an order afresh on merits. The ground No. 2 of the appeal of the assessee is enged addition of on account of unexplained credit. Upon a careful examination of the material on record, it is observed that the Learned Assessing Officer has taken note of the assessee’s trade and trade receivables . The Assessing Officer, after verification, determined the maximum outstanding balance as on , which was considered as the peak balance of the account and the fund requirement for running the the Assessing Officer treated the peak balance outstanding in the bank account at assessee’s fund requirement and further classified the same as unexplained cash credit under the relevant provisions of the Act. The Learned CIT(A) als counsel for the assessee has submitted that the assessee is willing to furnish all necessary documentary evidence to justify the peak credit balance. Accordingly, it has been prayed that an opportunity be granted for such verification. Considering the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit this issue to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall reconsider th matter after affording the assessee an opportunity to submit relevant documentary evidence in support of its claim. The Assessing Officer shall verify such evidence in accordance with law and render a fresh decision on the merits of the case. No. 3 of the appeal of the assessee is also allowed for statistical purposes. 6. In the result, both the appeals of the assessee and the Revenue are allowed for statistical purposes. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 balance outstanding in the bank account at ₹7,40,97,183/ assessee’s fund requirement and further classified the same as unexplained cash credit under the relevant provisions of the Act. The Learned CIT(A) also upheld this finding. Before us, the learned counsel for the assessee has submitted that the assessee is willing to furnish all necessary documentary evidence to justify the peak credit balance. Accordingly, it has been prayed that an opportunity ed for such verification. Considering the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit this issue to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall reconsider th matter after affording the assessee an opportunity to submit relevant documentary evidence in support of its claim. The Assessing Officer shall verify such evidence in accordance with law and render a fresh decision on the merits of the case. No. 3 of the appeal of the assessee is also allowed for statistical In the result, both the appeals of the assessee and the Revenue are allowed for statistical purposes. nounced in the open Court on 14/02/2025. Sd/- Sd/ RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER M/s Jasmine Computech Pvt. Ltd. 10 ITA No. 5766 & 5917/MUM/2024 7,40,97,183/- as the assessee’s fund requirement and further classified the same as unexplained cash credit under the relevant provisions of the Act. o upheld this finding. Before us, the learned counsel for the assessee has submitted that the assessee is willing to furnish all necessary documentary evidence to justify the peak credit balance. Accordingly, it has been prayed that an opportunity ed for such verification. Considering the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to remit this issue to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall reconsider the matter after affording the assessee an opportunity to submit relevant documentary evidence in support of its claim. The Assessing Officer shall verify such evidence in accordance with law and render a fresh decision on the merits of the case. The ground No. 3 of the appeal of the assessee is also allowed for statistical In the result, both the appeals of the assessee and the /02/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Dated: 14/02/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Jasmine Computech Pvt. Ltd. ITA No. 5766 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Jasmine Computech Pvt. Ltd. 11 ITA No. 5766 & 5917/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai "