9911796707
TMI Blog2016 (3) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... g in its books of account by establishing identity, genuineness and creditworthiness of the alleged parties. In our considered opinion, this conclusion of the Ld. CIT does not need any interference, hence, we uphold the same. As regards third part we note that Ld. CIT has noted that the entries in the fixed assets ₹ 4957110/- was to be looked into from different angles including actual investment, date of actual use, if any, admissibility of depreciation etc. and the AO has directed to enquire the same now. In our view the same also do not need any interference on our part, hence, we uphold the same. As regards last point we find that Ld. CIT has observed that the balance of ₹ 34,13,194/- certified by the bankers as on is not shown in the Balance sheet' and are not reflected in the respective accounts of the assessee. The same are also liable to be added in the income to the income of assessee for which the AO may provide the assessee reasonable opportunity of being heard and reconcile the difference with supporting evidence, if any. In our considered opinion, this conclusion of the Ld. CIT also does not need any interference on our part, hence, we uphold the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assessment Proceedings and again before her by the appellant. e) Provision of Sec. 145(3) are not applicable to the facts of applicant case and the Ld. Commissioner of Income Tax has invoke them without any proper justification. 2. That impugned order u/s 263 deserves to be cancelled. 3. That without prejudice to the above ground the addition of ₹ 2,95,58,101 as made by Ld. Commissioner of Income Tax is arbitrary unjust illegal at any rate without prejudice, the addition is made very excessive. 4. Direction issued by Ld. Commissioner of Income Tax vide pages 14 and 15 of the impugned order with regard to fresh unsecured loans and Sundry Creditors and also fixed assets ofRs. 49,57,110 are also arbitrary unjust and illegal. 5. Similarly observation made with regard to balance of ₹ 34,13,193 as certified by the Bankers as at 3l.3.2008 at Page 16 of the impugned order is also arbitrary unjust and illegal. 2. The briefly stated facts are that the assessee company filed its e-return on 18.9.2008 declaring total income of ₹ 7,37,800/- which was processed u/s. 143(1) of the I.T. Act. The case was selected for scrutiny through CASS an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be erroneous and prejudicial to the interest of Revenue and has made an addition of ₹ 2,95,58,101/- on account of alleged suppressed income as under:- a. Addition on account of inflated consumption of paper vide vide page-13 of impugned sec. 263 order. ₹ 3,00,00,000 b) Less: Irtcome shown ₹ 7,37,800 Net addition made ₹ 2,92,62,200 Add: Other income (interest as shown in P La/c): ₹ 3,35,901 Total income computed ₹ 2,95,58,101 Against the above order, the appellant relies on the following documents/submissions: 1. The Assessee is actually engaged in publication of Books for small children of Montessory section i.e. from nursery to Class V. Most of the books have coloured photographs of it and no book is more than 70 pages. Sale price varies between ₹ 7/- to ₹ 115/- but maximum-books are priced at below ₹ 50/-. Assessee allowed discount upto 40% on the sale of books hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .). d) 243 ITR 83, Malabar Industrial Co. Ltd. Vs. CIT, (Supreme Court) e) 323 ITR 206, CIT vs. Development Credit Bank Ltd. (Bombay H.C.), f} 323 ITR 632, CIT VS. Design and Automation Engineers (Bombay) P. ltd. (Bombay H.C.). g) 320 ITR 674, CIT vs. Ashish Rajpal (Delhi H.C.). h) 171 ITR 141, CIT vs. Ratlam Coal Ash Co. (M.P. High Court i) 111 ITR 326 J.P. Srivastava Sons Vs. CIT, (Jurisdictional Allhd. H.C.) j) 343 ITR 329, CIT vs. D.G. Housing Projects Ltd. (Delhi H.C.). k) 344 ITR 554, CIT vs. International Travel House Ltd. (Delhi H.C.). Therefore, section 263 order deserves to be cancelled because as demonstrated above, assessment order of the AO dated 30/11/2010 uls 143(3) was passed by proper application of mind and therefore section 263 in terms had no application to the facts of this case. 7. There is yet another aspect of the matter. Even before the Ld. CIT, the appellant having filed all the details before her and the ld. CIT having not herself rejected the same, the impugned order as passed by her uls 263 is illegal and untenable. The appellant relies on Jurisdictional Allahabad High Court judgment in 111 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment orders uls 143(3). 12. No justification subsisted on the part of the ld. CIT to invoke section 145(3) of the I.T. Act. She is also wrong in saying in last para at page 9 of the impugned order that the purchases and expenses debited to the P L Alc were highly inflated without bringing any evidence on the record of such alleged inflation. 13. As regards non showing of any opening or dosing stock of paper, the Ld. CIT is factually incorrect because the Assessee had duly shown opening stocks as under: Books : Rs.34,36,337 Paper .: Rs.11 ,68,450 Semi finished : ₹ 5,30,478 Total : Rs.51,35,265 For details filed before the authorities below, kindly see pages 47 - 48 of the paper book. Similarly details of closing stock had also been duly filed by the Assessee vide details at pages 49-50 of the paper book as per summary given below: Books : : Rs.13,48,344 Paper : ₹ 9,21,150 Semi finish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting of books in which A grade paper was considered to have been used are also factually incorrect. Such observations are nothing but bald statement made by the Ld. CIT without bringing any supporting evidence on the record and without confronting the same to the Assessee in the course of section 263 proceedings. 16. Further observations made by the Id CIT at page 13 that it is also not clear if 'sales' are credited at 'selling price' or at 'discounted' rate' which is a normal feature of this trade and in the absence of categorical answer to this and even after giving the assessee maximum margin of showing sales at discounted rate of 2/3 of the 'selling' price' the inflation of paper purchases come to ₹ 3 crores (Rs. 4.5 crores minus 1/3 of this) manifold on account of gross suppression of turnover and sales based upon consumption of paper shown as consumed in the publishing of books are also based on no evidence brought on record by her and the same are based on mere presumption. . Then she herself has not relied upon her own view by making the fol1owing observations in last 140e of para 1 at page 13 of her impugned order: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court judgment in 317 ITR 249 ClT VS. Countimeters Electricals Pvt Ltd in which it was held as under: The Tribunal was also right in holding that the Commissioner did not even call for any explanation of the assessee and the issue of fulfillment of the conditions of section 80-IA had not been part of the show cause notice. Therefore, it could not form the basis for revision of assessment order under section 263 . 19. Moreover, in response to section 263 notice, the appellant had filed a reply dated 25/02/2013 copy placed at pages 58-59 alongwith the following: a) Comparative chart of trading results page 60. b) Details of unsecured loans as on 31/03/2008 at page 61 alongwith confirmed copies of their accounts from pages 62 - 77 c) Details of sundry creditors at page 78 alongwith their complete confirmed copies of accounts at pages 79 - 128. The Ld. CIT had neither controverted nor disproved the above documentary evidence. Consequently, the impugned order as passed u/s 263 deserves to be cancelled. 5.2 The Additional Synopsis filed by the Asseessee s counsel are reproduced hereunder:- In continuation of our Synopsis as alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of no enquiry as alleged by the Revenue. In the case of inadequate enquiry. by the AO, action under s. 263 is not permitted . 2. There is presumption of application of mind by AO where original/regular assessment has been made u/s 143(3) of I.T. Act and ,such presumption is rebuttable only on the basis of some material:- a) 333 ITR 547, CIT vs. Honda Siel Power Products Ltd. (Delhi H.C), in which it was held as under: When a regular assessment is made under section 143(3), a presumption can be raised that the order has been passed upon an application of mind. No doubt, this presumption is rebuttable, but there must be some material to indicate that the Assessing Officer had not applied his mind . b) 297 ITR 99, CIT VS. Mahendra Kumar Bansal (Jurisdictional Allahabad H.C.), in which at page 100, it was held as under: That for the assessment year 1983-84, the assessment had been made under section 143(3)/148 of the Act. The date fixed by the assessing authority was July 18,1986, and on that very date the assessee's counsel had filed certain details and evidence and after discussion the assessment was framed. Even though in the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 263 of the Act. The Assessing officer had taken a particular view on the basis of the evidence produced before him. On the basis of the evidence before the Assessing Officer and materials which were collected by the Commissioner in revisional proceedings, the Commissioner had taken a different view. However, in the revisional proceedings under section 263, it was not open for the Commissioner to take such a different view. There was nothing on record to suggest that the view taken by the Assessing Officer was unsustainable in law. [The Supreme Court has dismissed the special leave petition filed by the Department against this decision: See 313 ITR (St.)5- Ed.] . 5. If no defects had been pointed out in the account books, the same could not be rejected and no addition could be made to the income of the assessee:- a) 76 ITR 365, St. Terasa's Oil Mil Vs. CIT (Kerala H.C.), in which it was held as under: Accounts regularly maintained in the course of business have to be taken as correct unless there are strong and sufficient reasons to indicate that, they are unreliable. The department has to prove satisfactorily that the account books are unr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) 75 ITR 207, RB. Bansi Lal Abir Chand Spinning Weaving Mills vs. CIT (Bombay H.C.) f) 73 ITR 224, N. Raja Pullaiah Vs. Deputy Commercial Tax Officer, AP. High Court. g) 74 ITR 279, Vijaya Traders Vs. CIT, (Mysore H.C.) In Appellant's case, mere higher consumption of paper as alleged by the Ld. CIT was no ground to reject the accounts particularly when both the gross profit rate and net profit rate when compared with earlier years was better. Moreover, this issue was not mentioned by the Ld. CIT in her section 263 notice and therefore the same cannot be made the basis for addition of ₹ 3,00,00,000/- on account of inflated consumption of papers for which reliance is placed on Delhi High Court judgment in CIT vs. Ashish Rajpa 320 ITR 674 and CIT vs. Contimeteres Electrical Pvt. Ltd. 317 ITR 249. 6. Non maintenance or incomplete stock records do not entitle the AO to reject the account books : a) 74 ITR 279, Vijaya Traders Vs. CIT, (Mysore H.C.) b) 26 ITR 159, Pandit Brother Vs. CIT (Punjab) In Appellant's case, day to day stock register may not be maintained due to the nature of its business but opening and closing stock tally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced before him during the course of assessment proceedings and placed at pages 115 to 126 of the paper book. Vide Sr. 22 of AO's letter dated 29/07/2010, copy placed at pages 36-38, such details of fixed assets were specifically sought for by the AO and the same were filed before vide letter dated 20/08/2010 kindly see Sr. No. 22 at page 42 of the paper book. 9. Regarding balance of ₹ 34,13,194/- with PNB as on 31/03/2008, the same stands included and reflected in the audited balance sheet amount of ₹ 37,16,410/- (kindly refer to page 5 of the paper book) as also explained before the AO vide letter dated 20/08/201 0 (kindly see page 39 of the paper book). The same was again explained before the Ld. CIT vide reply to section 263 notice dated 25/02/2013, copy placed at pages 58- 59 of the paper book . 10. Regarding Ld. CIT's allegation that regarding NP rate of 0.679% as shown by the Appellant, interest income to the tune of ₹ 3,35,901/- being income from other sources should have been excluded from such NP rate calculation. If such interest income is to be excluded from net profit, the revised net profit would become ₹ 3,69,889/- and the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m other sources to be assessed separately. After excluding the same from the business income, the Net Profit further comes down from the marginal figure to a still low figure whereas as per the assessment order. c) GP and NP rate slightly higher than the OP and NP rates of immediate preceding year. This is apparently contradictory to the facts on the records. Fresh unsecured loans to the tune of ₹ 1,20,69,799/-, abnormal sundry creditors to the tune ofRs.3,80,20,903/- have been shown which were also the reason for selection of cases for scrutiny. The AO appears to have accepted the same without proper inquiry. d) Increase in fixed assets to the tune of ₹ 49,57,1 10/-- have been shown which was also to be looked into from different angles including the actual investment, date of actual use, admissibility of depreciation etc. the records, however, appear to be silent on the same. e) The assessee had maintained Current Bank A/c. No. 2159001800000105 in Punjab National Bank, Sports Goods Complex, Delhi Road, Meerut. The assessee had made Fixed Deposits of ₹ 30,80,000/-- by way of Auto Sweep transactions from the same Bank Account. But, the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was found to be erroneous and judicial to the interest of revenue since at. the time of the assessment the AO was duty bound to call for such details and examine them. In the case of M/s. Malabar Industries, the Hon'ble Apex court has held that incorrect assumption of facts or incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall order passed without applying, the principles of natural justice or without application of mind. 5. The fundamental principles emerged from the Hon'ble Apex Court judgement in Malabar Ind. Co. Ltd Vs. CIT (2000) 243 ITR 83 (SC) include as follows: 1. An incorrect assumption of facts or incorrect application of law will suffice the requirement of the order being erroneous. 2. If the order is passed without application of mind, such order will fall under the category of erroneous order. 5.1. Further, it has been held in CIT vs. V.N.M.A. Rathinasabapathy Nadar, (1995) 215 ITR 309, 315 (Mad.), that if an order is passed in ignorance without taking into consideration of the relevant facts or is affected by the presence of any irrelevant fact into consideration, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, ITO should have made further inquiries before accepting the statements made by the assessee in his return and it was observed that reason is obvious. The position and functions of the ITO are very different from that of civil court. 5.3. On the facts of the present case, it is evident that the AO accepted the version of the assessee without making any inquiry or verification, whereas it is very well settled that mere failure to make inquiries makes an order erroneous. In order that the Commissioner may consider an order to be erroneous for the purposes of section 263, error of law may not be apparent on the fact of the order. The Commissioner may consider an order of the AO to be erroneous not only if it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case [Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal vs. CIT, (1973), 88 ITR 323 (SC). 5.4. It is not necessary for the Commissioner to make furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the appeal filed by the assessee. 5.7. In view of the foregoing, it is evident that the order passed by the AO is erroneous ~ as well as prejudicial to the interests of revenue for the reasons as state~ above. 6. In the course of proceedings U/S 263 Shri Pankaj Gupta, FCA counsel of the assessee attended and filed written submissions and the case was discussed with him. 7. As regards point (a) and (b) the assessee is a publisher of books. Against the gross receipts of Rs.I03927634/- it has returned an NP of merely ₹ 705790/- yielding the NP rate 0.679% one of the main reasons for which the case was selected for scrutiny was negligible NP rate. However the asst. record show that despite there being a large no. of discrepancies and despite their being the books of ale incorrect, incomplete and suffering from a no. of discrepancies provisions of s.145(3) have not been invoked and book results have been accepted as such. Following is the brief description whereby the tax auditors have categorically stated that books are not maintained in the manner so as to give a true and fair view in conformity with the accounting principles generally accepted in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d books of accounts are rejected under section 145(3) of the IT Act, 1961 on the grounds as discussed above are also not acceptable on their facts whereby a negligible profit has been shown whereas the purchases and expenses debited to the P L Alc are highly inflated. The total sales shown by assessee are to the tune of ₹ 103927633/- (quantitative details not maintained as discussed above). Against the same the assessee has claimed purchases as under: From P L Alc Purchases ₹ 5,92,52,253/- Assessee has shown opening as well as closing balance of finished and semi finished goods ofRs.51,35,265/- and 2568138/- respectively. It has not shown any opening or closing stock of papers. Nor is there any schedule for purchases and hence entire purchases are apparently shown as consumption and converting the same to at least semi finished stage which again does not appear to be correct. In any case, even while the purchases are taken as consumption of paper such consumption is even more than the purchases as the closing stock is about half of opening stock which comprised of finished and semi finished goods. Total Sales & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ex UP ₹ 65,76,393.00 Total ₹ 5,92,52,253/- This conclusion which is based upon the market rates of paper and the consumption thereof based upon the size of sheet which are used for printing of books, the rates thereof during the year under consideration for 'A' grade paper which is considered to be the best quality paper for publishing of books shows that the assessee has inflated its purchases and expenses at least to the tune and magnitude of ₹ 4.5crores merely on the basis of paper stated to have been consumed vis a vis the paper which is actually consumed for the production of books as shown in the books of account. This inflation of expenses and thereby the suppression of profit by ₹ 4.5 crores is merely on account of inflated paper consumption on account of bogus or inflated purchases. In the event of working out the turnover of the assessee on the basis of such purchase of paper, the suppression worked out at ₹ 4.5 crores will increase since the books of alc of the assessee are not reliable and rejected as above, it is also not clear if 's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the alleged parties. Reliance 'in this case is placed on the following case laws: (i) CIT Vs. La Medica (2001) 250 ITR -575 (Delhi) (ii) Sri Ganesh Rice Mills Vs. CIT (2007) 294 ITR 316 (Alld.) (iii) CIT Vs. United Commercial and Industrial Co.(199) 187 ITR 596 Cal. (iv) C.T Vs Precision Finance Pvt. Ltd. (Cal) 208 ITR 465 (v) CIT vIs Korlay Trading Co. Ltd. (Cal.) 232 ITR 820. (vi) Krishna Kumar Jbanb vIs ITO and Anr (Punjab Haryana) 17 DTR 249 vii) M/s Sejai International Ltd vIs Cl'I' Meerut (All.) Appeal No.306 of2010. viii) CIT Vs Durga Prasad More, 82 ITR 540 (SC) ix) ClT Vs P. Mobnakala, 291 ITR 278 (SC) x) CIT Vs Sumati Dayal, 214, ITR 801 (SC) xi) ITO Vs Diza Holdings Pvt. Ltd. 255 ITR 573 (Kerla) (xii) CIT Vs Nova Promoters and Finlease Pvt. Ltd. 18 Taxmann 217 (xiii) V.I.S P. (P) Ltd. Vs. CIT (MP), 265 ITR 202 Further Reliance is placed on the following case laws:- CIT vs. Devi Prasad Viswanath Prasad (SC) 72 ITR 194 Kale Khan Mohammed Hanif vs. CIT (SC) 50 ITR 1 Ratancband Dipchand vs. CIT(MP) 38 ITR 188 , CIT vs. Maduri Rajaiahgari Kistaiah ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perly number them and link them properly to the reply. 5. Please state the facts and avoid evasive replies. 6. Singular reference well also include plural. In connection with your assessment for A.Y. 2008-09, you are requested to submit / produce the following details before the undersigned at the date fixed for hearing, which is indicated towards the end of this letter: 1. A detailed note on business activities and history of the case alongwith complete addresses of all offices including branch offices and sister concerns of the company. Please also furnish a copy of Memorandum Article of Association. 2. Details of major shareholders of the company giving their percentage shareholding their PAN WardlCircle where they are assessed to tax. 3. Name addresses oflall concerns, Firms, Companies etc, wherein the co. or any of its directors are interested! having substantial interest giving details of such interest, if any. 4. Give information in respect of assessed/returned income for the two preceding years alongwith photocopies of Balance Sheet and P L A/c for A. Y. 2007-08 and also file a copy of last scrutiny assessment order. .' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 16. Give details of expenses incurred for increasing paid up share capital and treatment of the same in your books of A/cs. - 17. Furnish details of secured loan taken by you. 18. Give details of source of unsecured loan, creditors, with details of interest paid to them (if any), rate of interest, TDS on the same. 19. Sales monthwise - partywise details. 20. Details of valuation of closing stock and closing stock-method of valuation authenticity of stock declared. 21. Material purchased-partywise details, item, amount. 22. Furnish bills for additions made to fixed assets and when the assets were put use for purpose of business. 23. Calculation of MAT liability as per s. 115JB. 24. Justify allowability of payment to persons specified u/s 40A (2)(b). 25. Complete details of the current liabilities. Give details of names addresses of sundry creditors with copy of confirmed Nos. of parties with o/s balance exceeding ₹ 1,00,000/-. Also names address of parties who have made advance against sale, date of sale. 26. Furnish copy of challan for prepaid taxes paid by you. Your case is fixed for hearing on date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the year. It was ₹ 26 Lacs on 31.3.2007 as well as on 31.3.2008. No Share Application Money was received during the year ended 31 st March 2008 . 10. Loans and Advances (Dr.) : There are no Loans and Advances except for business purposes. No interest has been charged. The details of Advances to Supplies and Advances to Staff will be placed on the next date of hearing. 1 1. Provisions of Section 2 (22)(e) : No amounts have been advanced to Directors or to Concerns in which the Directors are interested, so the provisions of Section 2(22)(e) of The Income Tax Act, 1961, do not apply to the facts of the case. 12. Inventories: The detailed List of Inventories as at 31.3.2007 is at Page No.~ 83 to Page 84 The details List of Inventories as at 31.3.2008 is at Page No. 81 to Page No. 83 13. Monthwise details of Sales and Purchases: The Monthwise details of Sales are at Page No 80 to Page No . The Partywise details of Sales over ₹ 10 Lacs during the year are at Page No. 79 to Page No. - The Monthwise Details of Purchases are at Page No. 78 to Page No. - The Party wise Details of Purchases Over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of any expenditure incurred thereon does not apply to the assessee's case during the year under consideration. 17. Secured Loans: There has been NO Secured Loans with the assessee. 18. Interest Paid: . The details of Interest Paid are at Page No. 30. 19. Sales Monthwise of Partywise : The details of Sale. - Monthwise -- are at Page No :. to Page No The details of Sale - Partywise - are at Page No to Page No . 20. Valuation of opening and Closing Stock . This will be produced on the next date of hearing. 21. Details of Purchases - Partywise : . The details of Purchases Partywise are at Page No to Page No . 22. Additions to Fixed assets : The details of Additions to Fixed Assets along with zerox copy of Bills/Supports of over ₹ 50,000 are at Page No 3 to Page No 29 23 . MAT Liability: Mat Liability is no there, as the Regular Income Tax is being paid; which is much more than 15% of the Income. . 24. Directors Salary : The details of Directors Salary during the year as well as in the last year are at Page No 2. There has been no increase in the Salary of Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence filed by the assessee and without making any enquiry which is very much essential before accepting the claim of the assessee and completed the assessment in a hurry manner on 30.11.2010 passed u/s. 143(3) of the I.T. Act by passing a non-speaking order which is reproduced as under:- In this case return of income was e- filed on. 18.09.2008 declaring total income of ₹ 737800/- which was processed uls 143(1) of the IT. Act. The case was selected for scrutiny through CASS and statutory notice uls 143(2) was issued on 22-09-2009, which was duly served upon the assessee. In response to the notices issued u/s 142(1) and 143(2) counsel of the assessee Shri Pankaj Gupta, CA attended the proceedings from time to time and furnished required details and information and the case was discussed. 2. The assessee is engaged in the business of publication of books. During the year under consideration the assessee has shown G.P. rate and N.P. rate of 23.69% and 0.35% respectively which is slightly higher than the G.P. and N.P. rates of immediate preceding year. Trading results declared including expenses debited by the assessee have been examined and verified on test check basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made during the year in Balance Sheet as on 31.03.2008. The Closing Balance of Bank Account showed ₹ 3,33,194.47. The assessee had filed a hand written .Bank statement and other details shown at Page No. 353, 354, 355 356. As per Bank Statement Page No. 356 Fixed Deposit shown NIL As per Bank Statement Page No. 355 Fixed Deposit made ₹ 30, 80,000/- By way of Auto Sweep transactions from the aforesaid Bank Account As per Page No. 354 Closing Bank Balance as on 31.03.2008 shown ₹ 3,33,194.47 Total ₹ 3,33,194.47 e) As per Page No. 353, The Manager, Punjab NationalBank, Sports Complex, Delhi Road, Meerut had Certified vide his letter dated 16/06/2008 addressed to the assessee, stating therein that : This to Certified that the Balance Standing to your Debit / Credit in the above Bank Alc at the, Close of Business on 31.03.2008 was ₹ 34,13,194.47 only. f) As per Page No. 354, Closing Bank Balance showed as on 31.3.2008 ₹ 33,194.47. But, as per the certificate given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee and accepted the claim in a hurry manner without applying mind, but in the citation given by the Ld. Counsel of the assessee, the AO has made enquiry may be sufficient or may be insufficient, which is not the question before us. The present case is not a case of insufficient/ inadequate enquiry, but here the AO has accepted the claim of the assessee without any enquiry. 14.1 With regard to queries raised in the Notice u/s. 263 raised vide para no. (a) is concerned, we find that against the gross receipts of Rs.I03927634/- it has returned an NP of merely ₹ 705790/- yielding the NP rate 0.679% one of the main reasons for which the case was selected for scrutiny was negligible NP rate. However the asstt. record show that despite there being a large number of discrepancies and despite their being the books of alc incorrect, incomplete and suffering from a number of discrepancies provisions of s.145(3) have not been invoked and book results have been accepted as such. We further find that the tax auditors have categorically stated that books are not maintained in the manner so as to give a true and fair view in conformity with the accounting principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of opening stock which comprised of finished and semi finished goods. As per this percentage of paper consumption, the consumption of paper comes to as high as 74.70 % which is extremely inflated. Since the books of the assessee are unreliable from which profit could not be ascertained, the rates of paper prevailing during the year under consideration were obtained from outside vendors. 14.5 We further find that the inflation of expenses and thereby the suppression of profit of ₹ 4.5 crores is merely on account of inflated paper consumption on account of bogus or inflated purchases. We also observed that since the assessee has debited a number of other expenses as also wages all of which are also not duly vouched or supported by any material evidence and nothing has been brought on record so as to ascertain the correctness of the same, the actual profit earned by the assessee will further increase by substantial amount then ₹ 3 crores taken by conservative estimate of profits basis upon inflated purchases only. In the background of the aforesaid discussions, we are of the considered opinion that Ld. CIT has rightly made the addition of ₹ 2,95,58,101/- which do ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
