9911796707
TMI Blog2015 (1) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... te accepted by the Tribunal in the case of Krishan Kumar [2012 (9) TMI 548 - ITAT, DELHI] is 3.61% and in the case of Jai Parkash 3.63%. Therefore, considering all comparable cases, we are of the opinion that it would serve the interest of justice if the G.P. rate of 3.53% is adopted in the case of the assessee as was in the case of Sat Paul & Sons. We order accordingly. - Decided partly in favour of assessee as well as the Revenue. - ITA No. 3590/Del/2011, ITA no. 3542/Del/2011 - - - Dated:- 22-9-2014 - SHRI S.V. MEHROTRA AND SHRI H.S. SIDHU, JJ. For the Appellant : Shri Ved Jain FCA Smt. Ranu Jain For the Respondent : Shri Rakesh Kumar Sr. DR ORDER PER S.V. MEHROTRA, A.M:- These cross appeals, preferred by the assessee as well as the revenue, are directed against order dated 18-03-2011 passed by the ld. CIT(A), Karnal, in appeal no. IT/102/KNL/CIT(A)/09-10, relating to A.Y. 2008-09. 2. Brief facts of the case are that in the relevant assessment year the assessee derived income from timber business. He filed his return of income declaring total income of ₹ 1,53,993/-. The AO, in course of examination of books of a/c, and sale and purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for not accepting the same and after giving elaborate reasons rejected the books of a/c for the various deficiencies pointed out by him in the assessment order and determined the G.P. rate at 4.9% and made an addition of ₹ 19,08,583/- as against 2.58% declared by the assessee. 2.4. Before ld. CIT(A), the assessee, inter alia, submitted that it was not feasible to make the trading account for each item of timber dealt with. The assessee also pointed out that the firm dealt in one or two major type of woods which were almost of the same price, stock register was produced before the AO during assessment proceedings, details of item wise inventory of opening and closing stock was also filed before the AO. Therefore, it was submitted that provisions of section 145(3) were not applicable to the facts of the assessee s case. 2.5. Ld. CIT(A), after considering the assessee s submissions, upheld the rejection of trading results made by the AO by resorting to provisions of section 145(3). 2.6. As regards the G.P. rate adopted at 4.9% by the AO, ld. CIT(A) held that G.P. @ 4% was fair and reasonable, inter alia, observing as under: 1.08. The appellant dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the account books maintained by the assessee suffered from defects so as to warrant invoking of section 145(3) of the I.T. Act. 3. Ld. Counsel for the assessee submitted that rejection of books is unjustified but even if rejection of books is accepted, still reasonable rate should be applied for determining net profit. After going through the assessment order and ld. CIT(A) s order, we are of the opinion that on account of absence of necessary details in respect of sales and other discrepancies pointed out by AO, the books of account were rightly rejected. Now, the short issue is as to what is the reasonable rate of gross profit which should be applied. The assessee had disclosed the g.p. rate of 2.58%. The books of a/c were rejected by AO, who applied the g.p. rate of 4.90%. Ld. CIT(A) upheld the rejection of books of a/c but reduced the G.P. rate to 4% as against 4.9%. The assessee s contention is that the G.P. rate for the year under consideration shows an increasing trend rising from 2.26% for A.Y. 2006-07 to 2.58% while the G.P. rate for A.Y. 2005-06 was 2.16%. The contention of assessee is that only one comparable case for A.Y. 2007-08 is that of M/s Sat Paul Sons a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GP 17375 28.00 15600 90.00 30494 94.00 NP 23220 4.29 23977 1.82 36723 8.40 GP Ratio 2.37% 2.65% 3.63% 10. The assessment year under appeal is 2007-08. The comparable cases of other assessees are for AY 2004-05 to 2007-08. If we take the comparable cases of AY 2007-08, then we find that the GP rate for the comparable cases quoted by the Assessing Officer himself is 3.53% whereas in the case of the assessee, the GP rate is 3.63%. If we compare the trading result of the year under consideration as compared to earlier year in assessee s own case, we find that in AY 2006-07, the GP rate was 2.65% which is accepted by the Revenue in the order passed under Section 143(3) wherein the Assessing Officer held as under:- Purchases and sales shown have been verified from the books of account. During the course of asstt. proceedings it was noticed that the assessee had shown gross turnover of ₹ 58871050/- and G.P. of ₹ 1560090/- and G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 3.61% to 3.63% and, therefore, the same should be accepted. We are inclined to accept the contention of the ld. DR on this count because when G.P. rate is applied for similar line of business, then for same assessment year there could not be any wide variation in the G.P. rate. Merely because assessee has shown better result for the current year cannot be the sole criteria and due regard has to be given to the G.P. rate adopted in same line of business for same assessment year. The G.P. rate in the case of Sat Paul Sons (supra) has been taken at 3.53%. The AO has considered the case of Sat Paul sons as one of the comparable cases and we find that in the similar line of business the G.P. rate accepted by the Tribunal in the case of Krishan Kumar is 3.61% and in the case of Jai Parkash 3.63%. Therefore, considering all comparable cases, we are of the opinion that it would serve the interest of justice if the G.P. rate of 3.53% is adopted in the case of the assessee as was in the case of Sat Paul Sons. We order accordingly. 4.4. In the result, both the appeals, filed by the assessee as well as the Revenue are partly allowed. Order pronounced in open court on 22-09-2014. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
