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TMI Blog2013 (11) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... ter was maintained by the assessee he had maintained monthly sales and purchase of gold ornaments giving opening stock in value as well as in quantity and purchase in value as well as in quantity - The assessee had maintained sales and purchase bills which were fully vouched and no discrepancy was found either by the survey party or by the Assessing Officer – Assessee’s trading account was fully supported by quantitative account had not been controverted by the Revenue - Assessing Officer had found no other discrepancy in the books of account except non-maintenance of stock register - it purchases only old ornaments and after remaking them sells the same - the estimate of sales of Rs.20,000 per day by taking 300 days in the year as the working days of the assessee firm and estimation of GP rate @25% of the turnover was purely on the basis of surmises and conjectures and therefore should not be accepted – Decided against Revenue. - ITA No. 1238/PN/2011 - - - Dated:- 31-1-2013 - Shri Shailendra Kumar Yadav And Shri R. K. Panda,JJ. Sri Sunil Ganoo Ms. Ann Kapthuama ORDER Per R. K. Panda, AM :- The appeal filed by the revenue and the CO filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration to the holidays etc. the Assessing Officer held that there should be 300 minimum number of working days in a year. Considering the average sale of Rs.20,000 per day, the Assessing Officer determined the total sales for 300 days @ Rs.20,000 per day at Rs.60 lakhs. Applying the GP rate @25% and after giving credit to the GP declared by the assessee the Assessing Officer determined the suppressed gross profit at Rs.9,69,338 and added the same to the total income of the assessee. 4. Before the CIT(A) it was submitted that the assessee maintains regular books of account and also maintains quantity account in the ledger itself. It was submitted that the fall in GP was attributable to the fluctuations in the rate of gold and also due to overhead expenses on account of interest payment. It was submitted that the purchase and sale bills are duly vouched and were verified by the survey party and no discrepancy was found. The month- wise purchase and sales were produced before the Assessing Officer and no defects were found by the Assessing Officer. It was further submitted that non-maintenance of day to day stock and non-maintenance of inventory of opening and closing stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious qualifying remarks and should be taken as correct unless there are any strong and sufficient reasons to indicate that they are unreliable. According to him, the defects pointed out by the Assessing Officer to justify the rejection of the books of accounts are infact no defects. Relying on a couple of decisions, he observed that it is the settled proposition of law that section 145 of the I.T. Act cannot be undertaken in light hearted manner. The Assessing Officer has to point out specific mistake or discrepancy in the books of account which in the instant case he has not pointed out. Mere absence of stock register cannot justify resort to estimation of profits. He further noted that the Assessing Officer has not given any comparable profit rate nor has he brought any comparable case to justify the addition made by him. Further, the system of accounting of working out profit by the assessee is being followed consistently and therefore there is no justification to reject the system by making estimated profit. He noted that the approach of the Assessing Officer in the instant case is incorrect and unwarranted in the facts and circumstances of the case. He accordingly deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an estimate in the circumstances of the case. He also relied on the decision of the Ahmedabad Bench of the Tribunal in the case of ACIT Vs. Budhalal and Company reported in (2011) 10 taxmann.com 52 and the decision of the Bangalore Bench of the Tribunal in the case of DCIT Vs. Gajanan Traders reported in 104 TTJ 1030. 9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the Assessing Officer rejected the book results and made addition of Rs.9,69,338 by estimating the sales and gross profit on the ground that the GP rate declared by the assessee is ridiculously low as compared to the results of the preceding two years and that the assessee has not maintained any stock register. From the various submissions made by the assessee, we find although no stock register was maintained by the assessee he has maintained monthly sales and purchase of gold ornaments giving opening stock in value as well as in quantity and purchase in value as well as in quantity. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what was declared in the account books. In these circumstances, the CIT(A) and the Tribunal, in our view, were justified in holding that the AO could not have increased the GP ratio merely because it was low as compared to the GP ratio of the preceding year." 11. Similarly, we find the Hon'ble Punjab Haryana High Court in the case of K.S. Bhatis (Supra) has upheld the order of the Tribunal in holding that in absence of a definite finding that the case of the assessee comes within the ken of the first proviso to section 145(1), it is not possible for the Assessing Officer to reject the book results and make addition to the gross profit. It was held that the mere fact that the profits are low compared to the earlier year is not a circumstance or material aliunde which could justify an estimate in the circumstances of the case. Similar view has been taken in various other decisions relied on by the assessee before the learned CIT(A). In this view of the matter and in view of the elaborate discussion made by the learned CIT(A) while deleting the addition made by the AO, we find no infirmity in the same. Accordingly, the order of the CIT(A) is upheld and the ground raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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