9911796707
TMI Blog2015 (6) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting the books of account of the assessee. In the present year, the gross profit shown by the assessee is higher by 1.80% as compared to the preceding year. Even if books are rejected, adopting gross profit rate of 8.5% is excessive considering the facts particularly the gross profit of preceding year and hence, we feel that in the interest of justice, if gross profit rate of 8% is applied, it will serve the interest of justice. We direct the Assessing Officer accordingly. The Assessing Officer should adopt the gross profit rate of 8% on the declared turnover of ₹ 17,43,61,117/- and from the gross profit so worked out, he should reduce the gross profit already reported by the assessee and addition should be made only for the balance amount. - Decided partly in favour of assesee. Addition u/s 68 - CIT(A) deleted addition - Held that:- A clear finding has been given by him that the assessee has discharged his onus by submitting confirmation letter, PAN, Bank statement and letter from police department. In this manner, we find that the assessee has established all the three ingredients of 68 of the Act i.e. identity and creditworthiness of the creditor and genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2009-10. 2. The grounds raised by the assessee are as under: 1. BECAUSE no basis for selection of case for scrutiny assessment , having been given, the Assessing Officer cannot be said to be validly vested with the jurisdiction to make assessment under section 143(3) and accordingly the entire variation between the returned income and the assessed income is wholly without jurisdiction. 2. BECAUSE on a due consideration of the material and information already available on record, the CIT(A) should have deleted the entire variation between the returned income and the assessed income, in exercise of his powers which are coterminous with that of the Assessing Officer and no part of the same could have been sustained either on facts or in law. WITHOUT PREJUDICE TO THE AFORESAID 3. BECAUSE the C1T(A) has erred in law and on facts in upholding rejection of books of account (as had been made by the Assessing Officer) and in sustaining an addition of ₹ 9,21,620/- on account of extra profit as worked out in the following manner:- (a) Turnover as disclosed by the appellant and accepted in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved and on that basis in disallowing the appellant's claim for depreciation thereon, amounting to Rs,10,28,500/-. 10. BECAUSE while upholding the disallowance of depreciation claimed by the appellant on purchase of plant machinery for a value of ₹ 29,38,575/- from M/s. Miik Craft Engineers, the authorities below have failed to appreciate that; (a) purchase of machinery in question stood fully proved from the books of account and other records as maintained by the appellant; (b) plant and machinery so purchased by the appellant had duly been installed and put to use in the manufacturing activities carried on by it (the appellant); (c) the plant and machinery so purchased and installed by the appellant was found to be defective and the same was returned to the suppliers not in the year under appeal but in the subsequent year; (d) ex-parte denial made by the supplier of machineries, without the Assessing Officer giving an opportunity to the appellant to cross examine the said supplier, cannot be made the basis for arriving at a conclusion that plant and machinery in question had not been purchased at all; and accordingly the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges 195 to 201 of the paper book and in that year, no addition was made on account of gross profit. He further submitted that profit loss account of the assessee for the present year is available on page No. 22 and from the same, it can be seen that the gross profit shown by the assessee in the present year is much higher than the gross profit shown by the assessee in assessment year 2008-09 and therefore, no addition is justified on this account. 5. We have considered the rival submissions. We find that books of account were rejected by the Assessing Officer u/s 145 of the Act mainly on the basis that the closing stock shown by the assessee in balance sheet and the closing stock figure submitted to bank is different and closing stock shown to bank is much higher. Apart from this, some small discrepancies are also noted by the Assessing Officer and thereafter, he rejected the books of account and estimated the turnover and applied gross profit rate of 8.5% and made addition of gross profit of ₹ 2,08,67,745/- worked out by him on this basis. We also find that it is noted by CIT(A) on page No. 2 of his order that the assessee has shown turnover of ₹ 1,743.61 lacs wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of such profit was 6.12%. Hence, in the present year, the gross profit shown by the assessee is higher by 1.80% as compared to the preceding year. The basis adopted by Assessing Officer for rejecting the books of account in the present year is mainly for difference in stock statement submitted to bank and stock as per books. When we have hold that no addition is justified merely on the basis of stock statement submitted by the assessee to the bank, this factor alone cannot be a basis for applying higher gross profit rate particularly when gross profit declared by the assessee in the present year is better compared to the preceding year and in that year, no addition was made by alleging lower GP in spite of scrutiny assessment u/s 143 (3). Apart from this, some other discrepancies are also noted in the assessment order but the same are not material but still, we feel that even if books are rejected, adopting gross profit rate of 8.5% is excessive considering the facts particularly the gross profit of preceding year and hence, we feel that in the interest of justice, if gross profit rate of 8% is applied, it will serve the interest of justice. We direct the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.1 From the above observations of CIT(A), we find that a clear finding has been given by him that the assessee has discharged his onus by submitting confirmation letter, PAN, Bank statement and letter from police department. In this manner, we find that the assessee has established all the three ingredients of 68 of the Act i.e. identity and creditworthiness of the creditor and genuineness of the transaction. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and therefore, on this issue, we do not find any reason to interfere in the order of CIT(A). Ground No. 2 is rejected. 9. Now we take up ground No. 3 of the Revenue and ground Nos. 9 10 of the assessee. These grounds are inter-connected and therefore, these are being decided together. 10. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A) in respect of the issue raised by the Revenue in its appeal. Regarding the part addition upheld by CIT(A), he submitted that the machinery in question was returned to the supplier in next year and the same was used in present year and therefore, depreciation should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
