9911796707
TMI Blog2016 (4) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.99%. Since we have held that the books of accounts were duly maintained by the assessee, therefore, the estimation brought on record by the AO and confirmed by ld. CIT (A) is without any basis. Accordingly the addition made by the authorities below is hereby directed to be deleted. As books of accounts were duly maintained by the assessee and all the sales and purchases are duly vouched and maintained by it, therefore, we do not find any justification for disallowing 5% of the expenses towards Conveyance, Deepawali, General, Telephone, Transport and Car. Accordingly the disallowance made by the authorities below on these heads is also directed to be deleted.- Decided in favour of assessee - ITA Nos. 288/JP/2014 - - - Dated:- 24-2-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Assessee : Shri Shrawan Gupta (Advocate) For The Revenue : Smt. Neena Jeph (JCIT) ORDER PER SHRI LALIET KUMAR, J.M. The present appeal filed by the assessee is arising from the order dated 24.12.2013 passed by the learned CIT (A)-I, Jaipur for the A.Y. 2009-10. The assessee has raised the following grounds of appeal :- 1. That on law and fact the ld. CIT (A) has g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 1,65,40,423/- 15,31,339/- 9.26% 2008-09 3,16,33,355/- 22,00,342/- 6.96% 2009-10 6,04,07,173/- 30,14,582/- 4.99% During assessment proceedings, the assessee has furnished Form No. 3CB and 3 CD under section 44AB along with Audit Report. On being asked by the AO as to the reason for low GP rate, the assessee submitted that during the year under consideration the assessee has changed his business from production of running cloth to Kaftan (unstitched nighty cloths). The assessee has submitted that major sales were made to the parties of Anantpur, Andhra Pradesh and the sale proceeds were deposited by these parties in cash directly in the bank account opened by the assessee at Axis Bank, Anantpur (A.P) followed by telephonic information to the assessee and subsequently the amounts were transferred to the assessee s bank account at Jaipur. The entire direct deposits in bank account at Anantpur (AP) are duly incorporated in regular books of accounts of the assessee. In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .99% in asstt. Year 2009-10 while in asstt. Year 2008-09 2007-08 G.P. rate was 6.96% and 9.26%. The assessee sale has increased just double in comparison to 2008-09. 3. In asstt. Year 2009-10 the assessee has diverted his business fully from running cloth to kaftan only. The sale has increased subsequently but G.P. rate has reduced, since to achieve the sale target, G.P. rate is required to be reduced. Further due to competition in market G.P. rate has reduced. Hence for the above reason the G.P. rate has been reduced from 6.96% to 4.99%. On consideration of the submissions made by the ld. Counsel for the assessee, the AO found that the ld. A/R has filed no evidence in respect of the above contention of the assessee. The AO has also mentioned various defects in maintenance of books as observed at page 4 of the assessment order. Therefore, taking into consideration all the facts and circumstances of the assessee s case, rejected the books of accounts of the assessee by invoking provisions of section 145(3) and by applying average GP rate for three years of 8.54%, made a trading addition of ₹ 21,44,191/- to the total income of the assessee. 2.2. The AO has also made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of g.p. rate is concerned, it is seen that in the A.Y. 2007-08 on the sales of 1.65 crores, g.p. rate of 9.26% was shown. In the A.Y. 2008-09 the sales were shown at ₹ 3.16 crores and the g.p. rate was shown at 6.96%. In the year under consideration the appellant has shown sales of ₹ 6.04 crores and the g.p. shown is 4.99%. Thus, it is seen that while the turnover of the appellant has increased the g.p. rate has gone down. The contention of the appellant that there was change in the line of business and the profit margin is to be reduced to increase the turnover of the appellant may be correct to some extent. However, since the appellant has not maintained proper books of account, the g.p. rate shown by him cannot be accepted. Considering the over all facts and circumstances of the case, it would be appropriate to apply g.p. rate of 7% on total sales disclosed by the appellant. The AO is directed to compute the gross profit, accordingly. 3.1. Regarding the issue of disallowances made by the AO, the ld. CIT (A) restricted the disallowances to 5% of the expenses incurred under these heads, by observing as under :- 4.2. Now coming to the disallowance out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with all the annexures, Audit Report and report in Form No. 3CD. The assessee has also produced books of accounts, namely Cash Book, Ledger, Journal, vouchers and bills of expenses and purchases, sale book and bank statements before the AO, as required by him. Concluding his argument, the ld. A/R submitted that the AO has found no defect in the accounts maintained by the assessee except that GP shown by the assessee was low in comparison to earlier years for which the ld. A/R explained that due to considerable increase in sales this year, the GP rate is reduced. Therefore, he requested that the addition may kindly be deleted. 4.2. On the other hand, the ld. D/R relied on the order of ld. CIT (A). 4.3. We have heard the rival contentions and perused the material available on record. We noticed that it is an undisputed position that the assessee has changed the business from production of running cloths to Kaftan and it is also undisputed position that major sales of the assessee were made in Anantpur (A.P). It is also undisputed that purchases and sales of the goods were duly supported by vouchers and the purchases were made from registered dealers. The payments were made thro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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