|The Tax Publishers2020 TaxPub(DT) 5093 (All-Trib)
INCOME TAX ACT, 1961
Where assessee allegedly engaged in business of Paan and cold drinks, was aggrieved by addition made by AO, wherein there was an enhancement of profit ratio, as against ratio declared by assessee, matter was remitted back to AO for fresh enquiry as to profit declared by assessee in the earlier years and its acceptability by revenue.
Accounting method - Rejection of books of account - Enhancement of profit ratio, as against ratio declared by assessee -
Assessee was engaged in business, wherein AO alleged that assessee was engaged in the business of Paan and cold drinks. Assessee on its part was contending that he was only engaged in the business of cold drinks, wherein he was re-selling cold drinks of Pepsico and also selling 'Masala Drink' made by adding Masala to cold drinks of Pepsico which fetched higher profits/margin compared to simply re-selling bottles of Pepsico. Assessee was aggrieved by addition made by AO, wherein there was an enhancement of profit ratio to 25% as against profit ratio declared by assessee to the tune of 20%. Held: Assessee, on its part, did not file complete details, nor stock records were filed as well balance sheet were not filed. Revenue had detailed in their orders about non submission of records by assessee. The details called for by Tribunal were also not filed for the profits declared in the preceding years and its acceptability by revenue for those years. It was important to compare profit ratio declared by the assessee in the earlier years and the acceptability of the same by revenue in those years. Matter was remitted back to AO for fresh enquiry as to profit declared by the assessee in the earlier years and its acceptability by revenue and if the same were accepted by revenue in those three years and similar business was carried on by the assessee in the relevant years, then in that situation, AO was directed to adopt average of the profits for the last three years or the profits declared by the assessee for relevant assessment year, whichever was higher.
FAVOUR : Matter remanded.
A.Y. : 2008-09
INCOME TAX ACT, 1961
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