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TMI Blog2013 (9) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... t] - if there was no challenge to the transactions represented in the books then it is not open to Revenue to contend that what is show by the entries is not the real state of affairs - Secondly, even if for some reason, the books are rejected it is not open to the A.O. to make any addition on estimate basis or on pure guess work - No specific discrepancies or defects in the books of account of the assessee have been pointed out before us nor was any material brought to our notice to establish that purchases were inflated or receipts suppressed - CIT vs. Vikram Plastic [1998 (8) TMI 43 - GUJARAT High Court] - there were no discrepancies or defects pointed out in the books of account and further that they were regularly maintained addition also on the finding that there was no material brought on record to establish that purchases or expenses were inflated or sales suppressed and also in view of the finding that it was not the case that there was no method of regular accounting employed, the Tribunal was fully justified in coming to the conclusion that the provisions of Sec. 145(2) of the Income Tax Act,1961, could not be invoked - This conclusion was based on a finding of fact and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A)-V, Baroda erred in law addition on facts in partly confirming the addition on account of gross profit. The confirmation of such addition of Rs.24.50 lakhs being unjust and unlawful be deleted now. 4. Assessee has also raised additional ground as under:- The Ld. CIT(A) erred in law and on facts in confirming disallowance, made by ITO u/s. 40(a)(ia) of the Act of Rs.60,27,878/-. 5. Since 1st Ground of assessee s appeal and 1st ground of Revenue are inter-connected, both are considered together. 6. The facts as culled out from the orders of authorities below are as under. 7. Assessee is a company engaged in the business of manufacturing of chemicals. It filed its return of income on 31-10-2005 declaring total loss of Rs.38,08,629/-. The case was selected for scrutiny and thereafter the assessment was framed u/s.143(3) vide order dated 24-12-2007 and the total income was determined at Rs.1,10,24,060/- after making various additions/disallowances. 8. Aggrieved by the order of A.O., assessee carried the matter before CIT (A). CIT (A) vide his order dated 29-3-2010 partly allowed the appeal of the assessee. It is against the aforesaid order of CIT (A), the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Here it is pertinent to note that during the course of assessment proceedings for the assessment year 2004-05, the assessee could not justify the fall in GP rate as compared to the preceding year and the assessing Officer had added the GP difference while finalizing the assessment. In absence of any specific justification towards the increase in manufacturing cost, I am of the opinion that during the year the assessee has not declared a correct GP by inflating the expenses. Accordingly, in view of above background of the case, it is clear that the assessee could not prove its claim of negative G.P. ratio. The reasons put forth by assessee are not acceptable in light of above discussion. The assessee is not in position to substantiate its own claim. I am unable to accept claim of assessee. In the earlier assessment proceedings for A.Y. 2002-03 and 2004-05 to meet the ends of justice and a lump sum addition was made to compensate fall in G.P. ratio. I have no reason to differ from my predecessor and in all fairness a lump sum addition of Rs.61 lakhs is made on the total sales of Rs.122.49 lakh by applying G.P. rate of 5%. 10. Aggrieved by the order of A.O., assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses on adhoc basis. He has not pin pointed a single instance of bogus expenditure as to why the expenses should be disallowed. Further, he has also not rejected the book results by invoking the provisions of Sec. 145(3). 14. In the case of Jay Pulse Mills v/s ITO (ITA No.1317 -1319/Ahd/2004 order dated 7-5-10, the Co-ordinate Bench held as under:- 7. The assessee has produced the complete books of account before the Assessing Officer including bills and vouchers audited by the Chartered Accountant. The assessee has also maintained the stock register and after going through the assessment orders in these seven assessment years, we find that there is no whisper about the defects in the books of accounts. Even the A.O. has not invoked the provisions of Sec.145A of the Act and has not rejected the book results. Once the book results are not rejected, the A.O. has no alternative except to accept the book results. In the present case, the A.O. has not rejected the book results and found no defects in the books of accounts of the assessee for all the seven assessment years. In such a situation, the question arises is whether, the A.O. in exercise of his powers u/s.145(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 order dated 26-2-10) the co-ordinate Bench has held as under:- 5 . Low profit in a particular year in itself cannot be a ground for invoking the powers of best judgment assessment without support of any material on record. The Hon ble Gujarat High Court in the case of CIT vs. Amitbhai Gunwatbhai 129 ITR 573 held that if there was no challenge to the transactions represented in the books then it is not open to Revenue to contend that what is show by the entries is not the real state of affairs. Secondly, even if for some reason, the books are rejected it is not open to the A.O. to make any addition on estimate basis or on pure guess work. No specific discrepancies or defects in the books of account of the assessee have been pointed out before us nor was any material brought to our notice to establish that purchases were inflated or receipts suppressed. 16. In the case of CIT vs. Vikram Plastic (239 ITR 161) (Guj), the Hon ble High Court has held as under:- Held, dismissing the application for directing reference (i) that in view of the finding reached by the Tribunal that there were no discrepancies or defects pointed out in the books of account and further that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeper examination of the documents in the assessment records, it is gathered that the appellant had deducted TDS of Rs.2,09,462/- during the year which broadly corresponds to receipts of Rs.1,04,73,100/- (TDS rate of 2%) and after allowing for the suo moto adding back by the appellant of Rs.44,45,222/-, the rest of the disallowance would be Rs.60,27,878/-. It is also noticed that the TDS of Rs.2,09,462/- was deducted but was not paid and that TDS of Rs.1,14,422/- which was paid in the next financial year also related to the contractual payments for months earlier than March, 2005. Accordingly, the disallowance by A.O. u/s. 40(a)(ia) of the Act of Rs.60,27,878/- is confirmed. Ground No. 1 is partly allowed. 21. Aggrieved by the order of CIT (A), assessee is now in appeal before us. 22. Before us, the Ld. A.R. submitted that it had deposited the TDS in the account of Government before filing of the return of income. He placed on record the copy of statement in support of his contention that the TDS has been deposited before filing the Return of income He further submitted that since the TDS has been deposited before filing of return there cannot be disallowance u/s. 40(a)(ia) an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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