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Showing contexts for: turnover decrease in Stephen Bernard, Mumbai vs Assessee on 28 October, 2014Matching Fragments
The assessee had met with an accident and even now is not fully recovered. On account of discrepancies pointed out to the assessee in voucher produced the assessee has agreed for disallowance of expenses amounting to Rs.25 lacs (Rupees Twenty Five lac). Subject to no penalty /prosecution. The assessee agrees to pay tax on the amount before 15th March, 2011".
From the above, it could be seen that the assessee's representative Mr. M.K. Varghese, C.A. agreed for addition of Rs.25,00,000/- and signed in the order sheet. Further it is noticed that the net profit admitted by the assessee was less than 1% and even after the addition of Rs.25,00,000/- made by the A.O. the net profit rate is still below 2.5%. In the circumstances, I find that the assessee's representative agreed for addition before the AO to avoid further scrutiny of cash payments and, therefore, there is no justification for contesting the agreed addition. In any case the net profit rate admitted by the assessee is very low even when the turnover was more than Rs.15 Cr. Other assessees engaged in similar line of business admitted higher net profit rate even when the total turnover was less. The claim of the assessee that there was decline in the net profit rate due to decreased turnover cannot be accepted. I find that the AO after considering the reasons given by the assessee for low net profit has reasonably added Rs.25,00,000/- that too on agreed basis. Admittedly, the letter dt.22.12.2010 was filed before the AO on 23.12.2010 whereas the assessment was completed on 21.12.2010. Even otherwise having agreed for addition and signed in the order sheet the assessee would not be justified in filing letter dt.22.12.20 10 requesting the AO not to make any addition. The assessee's representative signed in the order sheet agreeing for addition of Rs.25,00,000/- and, therefore, there was no merit in filing the letter dt.22.12.2010. In the circumstances, he did not find any merit in the grounds raised by the assessee and the same is Shri Stephen Bernard rejected."