] IN INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM ITA No.889/PN/2014 Assessment Year : 1995-96 M/s Patel Bhagwandas Narayandas, 153, Polan Peth, Jalgaon 425 001. PAN : . Appellant Vs. Dy. Commissioner of Income Tax, Circle 2, Jalgaon. . Respondent / Appellant by : None (Written Submission) / Respondent by : Shri P. L. Kureel / / Date of Hearing : 27.09.2016 Date of Pronouncement: 07.10.2016 / ORDER PER ANIL CHATURVEDI, AM : This appeal by assessee is directed against order of Commissioner of Income Tax (Appeals)-2, Nashik dated 05.03.2014 for assessment year 1995-96. 2. relevant facts as culled out from materials on record are as under :- 2.1 Assessee is partnership firm stated to be engaged in business of trading of fertilizers. assessee filed its return of income for assessment year 1995-96 on 31.10.1995 declaring total income of Rs.71,470/-. case was selected for scrutiny and thereafter assessment was framed under section 2 ITA No.889/PN/2014 143(3) r.w.s. 145(2) of Income Tax Act, 1961 (in short Act ) vide order dated 20.03.1998 and total income was determined at Rs.1,18,51,400/-. Aggrieved by order of Assessing Officer, assessee carried matter before ld. CIT(A), who vide order dated 12.03.2001 granted substantial relief to assessee. Thereafter, matter was carried before Tribunal. Co-ordinate Bench of Tribunal vide order dated 28.06.2007 remitted matter back to file of ld. CIT(A) and directed him to de novo examine matter and pass fresh order. Pursuant to directions of Co-ordinate Bench of Tribunal, ld. CIT(A) vide order dated 05.03.2014 (in Appeal No.Nsk/CIT(A)-2/361/09-10) granted partial relief to assessee. Aggrieved by order of ld., assessee is now in appeal before us and has raised following grounds :- 1) On facts and in law Id. CIT(A)-II, Nashik has erred in estimating gross profit of business of assessee @ 1.75% as against declared by assessee @ 1.32% and assessed by predecessor of CIT(A) @ 1.40%. 2) On facts and in law Id. CIT(A)-II, Nashik has erred in not telescoping addition on account or unproved liability of Rs. 1,14,520/- against G.P. addition confirmed by him at Rs. 7,25339/-. 3) On facts and in law Id. CIT(A)-II, Nashik has erred in holding that addition is to be confirmed i) on account of alleged unproved credits in form of G.P. addition at Rs. 92,000/-. ii) on account of alleged unproved and fictitious liability at Rs.1,14,520/-. iii) on account of alleged fictitious credit notes at Rs.2,67,387/-; iv) on account of alleged suppressed production sold in form of G.P. addition at Rs. 61,084/-. Your appellant craves, leave to add, alter delete above or any other ground/s of appeal. 3. On date of hearing, assessee did not appear but however it has filed written submissions vide letter dated 18th March, 2016 and submitted that appeal be decided on basis of written submissions. In view of written 3 ITA No.889/PN/2014 submissions of assessee, we proceed to dispose of appeal ex-parte qua assessee on basis of material on record and written submissions. 4. Ground No.1 is with respect to estimation of GP. 4.1 survey under section 133A was conducted on business premises of assessee on 10.03.1995. Thereafter, assessee filed return of income on 31.10.1995 declaring total income at Rs.71,470/-. Assessing Officer passed order under section 143(3) of Act wherein he assessed total income at Rs.1,18,51,398/- by making various additions. Thereafter, matter was carried before ld. CIT(A), who vide order dated 12.03.2001 rejected book results and estimated Gross Profit (GP). CIT(A) estimated turnover at Rs.16 crores as against turnover of Rs.15.64 crores declared by assessee and on turnover of Rs.16 crores he estimated GP at 1.40% as against GP at 1.32% declared by assessee. Thereafter, matter was carried before Tribunal. Hon ble Tribunal remitted issue back to file of ld. CIT(A) with directions contained therein. Pursuant to directions of Hon ble Tribunal, ld. CIT(A) again rejected book results and estimated GP rate at 1.75% on estimated turnover of Rs.16 crores as against turnover of Rs.15.64 crores declared by assessee. Aggrieved by order of ld. CIT(A), assessee is now in appeal before us. 5. Before us, assessee in written submissions submits that estimation of GP at 1.75% as against GP at 1.32% declared by assessee is on higher side and even in comparable cases of wholesale and retail sale GP is at 1.14% to 2%. He further submitted that GP in assessment year 1994-95 was 1.46% on turnover of Rs.8.01 crores as against GP declared for 4 ITA No.889/PN/2014 year at 1.32% on turnover of Rs.15.64 crores. He therefore submitted that estimation of GP on higher side and that same be estimated at 1.57% of total turnover. Ld. DR, on other hand, supported order of lower authorities. 6. We have heard ld. DR and perused material on record. We find that ld. CIT(A) noted that there were various discrepancies in maintenance of accounts and therefore books of accounts maintained by assessee could not be relied upon. He therefore upheld rejection of books of accounts and thereafter taking into consideration various observations of Assessing Officer estimated turnover of assessee at Rs.16 crores as against turnover of Rs.15.64 crores shown by assessee. Considering totality of facts, we do not find any error in finding of ld. CIT(A) in estimating GP on basis of turnover estimated by him. We thus dismiss this ground of assessee. 7. With respect to second ground, it is submitted that during year assessee had made purchases from M/s Manoj Krishi Seva Kendra and outstanding amount payable as on 31.03.1995 was Rs.1,64,700/- as against which outstanding balance receivable as per creditor was Rs.55,130/-. It is submitted that Assessing Officer presumed that assessee must have made unaccounted payments to extent of Rs.1,14,570/- to said party and accordingly liability shown by assessee to extent of Rs.1,14,570/- was fictitious liability. He accordingly made addition. addition made by Assessing Officer was confirmed by ld. CIT(A). Before us, it is assessee s contention that it is presumption that unaccounted payment of Rs.1,14,570/- has been made out of undisclosed income. He submitted that when ld. CIT(A) has rejected books of assessee and has estimated undisclosed income by 5 ITA No.889/PN/2014 estimating GP then such undisclosed income owned by assessee was available for making unaccounted payment and therefore assessee should have been granted telescoping benefit in respect of addition of Rs.1,14,570/-. It is further submitted that separate addition on account of unaccounted purchases amounts to double additions moreso when income is also estimated. He therefore submitted that assessee be granted telescoping benefit. ld. DR, on other hand, supported order of Assessing Officer. 8. We have heard ld. DR and perused material on record. We find that addition on account of unaccounted payment to creditors has been confirmed by ld. CIT(A) for reason that assessee could not reconcile balance that was shown by assessee and creditors. It is also fact that addition on account of GP has been made by estimating turnover and GP has been estimated at 1.75% as against GP of 1.32% declared by assessee. It is submitted by assessee that Assessing Officer has not alleged that assessee has debited any bogus purchase in name of above party and then addition has been made on basis of presumption. We find force in contention of assessee that addition has been made on basis of estimation. Further, it is also fact that no material has been placed by Revenue on record to demonstrate any bogus purchases made by assessee from aforesaid party. Considering totality of facts and submissions of ld. AR, we are of view that no separate addition on account of bogus purchase of Rs.1,14,570/- is called for in present case and that addition confirmed by ld. CIT(A) by estimating GP would take care of present addition also. In view of aforesaid facts, we direct deletion of addition of Rs.1,14,570/-. Thus, this ground of assessee is allowed. 6 ITA No.889/PN/2014 9. In written submission, assessee has stated that he did not wish to press ground No.3(i) to (iv). In view of aforesaid submissions of assessee, these grounds are dismissed. 10. In result, appeal of assessee is partly allowed. Order pronounced on this 7th day of October, 2016. Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER Pune; Dated : 7th October, 2016. /Copy of order is forwarded to : 1) Assessee; 2) Department; 3) CIT(A)-2, Nashik; 4) CIT-2, Nashik; 5) DR B Bench, I.T.A.T., Pune; 6) Guard File. / BY ORDER, //True Copy// / Sr. Private Secretary , / ITAT, Pune M/s Patel Bhagwandas Narayandas v. Dy. Commissioner of Income-tax, Circle – 2, Jalgaon