2015 (12) TMI 701 - AT - Income Tax

Estimation of Gross Profit - CIT(A) deleted the addition - Held that - As decided in assessee s own case for previous AYs 2005-06 to 2007-08 the rejection of books of account u/s.145(2) was not justified on the basis of defects pointed out by the A.O. Further, GP addition also is not required due to substantial trading in lignite during the year. The reasons given by the appellant is based on evidences. Thus, we allow the appeal of the assessee on both grounds. - Decided against revenue Disallowance on account of transportation charges (Noor & Jakat) - CIT(A) deleted the addition - Held that - As decided in assessee s own case for previous AYs 2005-06 & 2006-07 This is not the case of the A.O. that payment of noor jakat expenses is excessive or unreasonable as compared to earlier years. It is also not mentioned that what type of details were called for and moreover, no actual addition was made by the A.O. in the computation of income in page 13 of the assessment order and it has not brought on record to show that the mistake was rectified u/s 154 within the time allowed under that section. Even if this has been rectified then also we feel that such ad-hoc disallowance without pointing out as to what was the details called for which were not submitted, is not justified. - Decided against revenue

Summary

Issues Involved:
1. Deletion of addition on account of estimation of Gross Profit.
2. Deletion of disallowance of transportation charges (Noor & Jakat).
3. Rejection of books of accounts.
4. Deletion of addition on account of lignite freight liability.

Detailed Analysis:

1. Deletion of Addition on Account of Estimation of Gross Profit:
The Revenue challenged the deletion of an addition of Rs. 10,45,770 made by the Assessing Officer (AO) on the grounds of low Gross Profit (GP). The AO had rejected the books of accounts due to perceived discrepancies and estimated a GP rate of 12% on sales of steam coal, resulting in the addition. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted this addition, and the Income Tax Appellate Tribunal (ITAT) upheld CIT(A)'s decision. The ITAT noted that similar additions in previous years (2005-06 to 2007-08) had been deleted by the Tribunal, and the facts remained consistent. The Tribunal found no reason to interfere with CIT(A)'s findings and upheld the deletion of the addition.

2. Deletion of Disallowance of Transportation Charges (Noor & Jakat):
The AO disallowed Rs. 6,95,799 on account of transportation charges, citing incomplete details and unverifiable cash payments. The CIT(A) deleted this disallowance, and the ITAT upheld the deletion. The ITAT observed that similar disallowances in previous years had been deleted by the Tribunal, and the AO had not specified the details required for verification. The Tribunal concluded that the ad-hoc disallowance without specific deficiencies was not justified and upheld CIT(A)'s decision.

3. Rejection of Books of Accounts:
For the Assessment Year 2009-10, the AO rejected the books of accounts due to various defects and discrepancies. The CIT(A) allowed the assessee's appeal against this rejection. The ITAT upheld CIT(A)'s decision, noting that similar issues in previous years had been decided in favor of the assessee. The Tribunal found no new evidence or arguments from the Revenue to warrant a different conclusion and upheld the rejection of the books of accounts.

4. Deletion of Addition on Account of Lignite Freight Liability:
The AO made an addition of Rs. 18,98,614 on account of lignite freight liability, which was deleted by the CIT(A). The ITAT upheld this deletion, following the same reasoning as in the previous issues. The Tribunal noted that the facts and issues were similar to those in the assessee's own case for the previous year, where such additions had been deleted. The Tribunal found no reason to interfere with CIT(A)'s findings and upheld the deletion of the addition.

Conclusion:
The ITAT dismissed the Revenue's appeals for both Assessment Years 2008-09 and 2009-10, upholding the CIT(A)'s decisions to delete the additions on account of estimation of Gross Profit, disallowance of transportation charges, rejection of books of accounts, and addition on account of lignite freight liability. The Tribunal consistently relied on precedents from previous years where similar issues had been decided in favor of the assessee.