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TMI Blog2016 (7) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the I. T. Act. 3. That the Ld. CIT(A) is not justified in not giving the set-off of loss from the business as claimed by the appellant while computing the total income. 4. (a) That the Ld. CIT(A) is not justified in upholding the application of net profit rate @ 8% on gross sales. (b) That without prejudice to above, the appellant disputes the quantum of net profit rate." 3. Briefly stated the facts of the case are that the assessee was running liquor, wine and beer shop in Manimajra and Kaimbwala area of Chandigarh in the name of his proprietary concern M/s Hem Raj & Co. The assessee is a contractor authorized to operate the liquor shop for the period of one year from April, 2007 to March, 2008 under the laws of Excise Department of Chandigarh Administration. The assessee purchased wine from different suppliers and the same is sold in cash. In the return of income, the assessee had shown income under the head "salary" only. During the course of assessment proceedings, the assessee furnished his reply together with Profit & Loss Account, Balance Sheet and Audit Report in Form No. 3CD for the financial year 2007-08. The assessee also furnished ledgers, bills/vouchers of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingh Associates of Gwalior and 15.5% of M/s Luxmi Narain Shivhare & Co. of Gwalior. Accordingly, the Assessing Officer made an addition of Rs. 12,81,872/-. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT (Appeals) and the learned CIT (Appeals) vide his order dated 13.7.2012 upheld the order of the Assessing Officer, and hence the assessee is in appeal before the Tribunal. 5. Before us, Shri N.K. Saini, learned counsel for the assessee reiterated the submissions made before the lower authorities. He further submitted that the assessee submitted his return for the year under consideration declaring salary income at Rs. 1,65,800/-. He further submitted that during the year under consideration, the assessee was also engaged in the business of wine and liquor and incurred a loss of Rs. 1,07,746/-. According to him, the other loss was not claimed in the return as the same was not allowed to be set-off against the salary income. He further pointed out that the assessee was maintaining proper books of account along with purchase, expenses bills/vouchers and daily sales statements, which were duly audited and the same we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount on the day on which actual payment for the same is made. He further pointed out that there is no discrepancy in purchases and freight ledger, as pointed out by the Assessing Officer. The total charges paid on this account are Rs. 32,083/-. These expenses were never held to be bogus expenses by the Assessing Officer. He further pointed out that certain handmade bills for freight, miscellaneous expenses, repair & maintenance, staff welfare, printing & stationery were submitted before the Assessing Officer. The learned counsel for the assessee submitted that in para 8.6 of the assessment order, the Assessing Officer has mentioned that the rate of profit estimated at 8% is very reasonable and much lesser than the profit rate of 13.13% applied in the case of Singh Associates of Gwalior (supra) and 15.5% applied in the case of Luxmi Narain Shivhare & Co. of Gwalior (supra). The learned counsel for the assessee pointed out that these two cases pertain to assessment year 2000-01. The learned counsel for the assessee referred to the decision of I.T.A.T., Agra Bench in the case of ITO Vs. Laxmi Narain Ramswaroop Shivhare(2009) 119 ITD 0015(TM) relating to assessment year 2001-02. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the sales are made in cash and recorded on the basis of daily sales statements given by the employees attended to the shop. It is also stated that this practice is prevalent all over the country. The Assessing Officer has not accepted the book results and rejected the books of account by invoking the provisions of section 145(3) of the Act. The Assessing Officer has observed that the assessee had not maintained day-to-day stock register due to lack of sale records. He further pointed out the discrepancies in purchase and freight ledgers. He also stated that the bills/vouchers of several expenses were not available, for example freight, miscellaneous expenses, repair & maintenance, staff welfare and printing & stationery. It is true that the Assessing Officer has accepted the sales of Rs. 1,60,23,400/- declared by the assessee, however, he has applied the net profit rate of 8% on the declared sales and made the addition of Rs. 12,81,872/-. It is observed that the assessee furnished trading and Profit & Loss Account for the year ending 31.3.2008 before the Assessing Officer, which is reproduced at page 4 of the assessment order and the same reads as under: MR. HEMRAJ TRADIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquor and the practice of not issuing bills is prevalent all over the country in this trade. It is also the case of the assessee that the sale price is displayed at the shop and there cannot be any variance in the price so displayed. In the instant case, the Assessing Officer himself has accepted the correctness of sale amount by admitting the declared sales by the assessee, which were substantiated by the entries in the books of account maintained in the regular course of business carried on by the assessee. We may also observe here that the Assessing Officer has not pointed out any discrepancy in the quantitative details of purchase or sales made by the assessee. Shri N.K. Saini, learned counsel for the assessee submitted that the cost of goods dealt inter-alia including purchase price, duties and fees paid, shop licence fee and bottling and sealing charges paid by the assessee has been accepted by the Assessing Officer. The learned counsel for the assessee submitted that the books of account cannot be rejected merely on the basis of lack of sale bills. He relied upon the decision of I.T.A.T., Amritsar Bench in the case of Ashok Kumar & Co. Vs. ITO (2004) 90 TTJ 666 (Asr). In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f liquor effected at its various shops in terms of system prevalent in the trade, the fact remains that the daily sales effected by the employees deployed at its various shops and brought to assessee's central office were taken into sales account in such books of account, as the same were the sale proceeds that were actually received by the assessee. The entries in the books of account maintained in regular course are considered as relevant and is a prima facie proof or basis to justify the correctness thereof. Reference may be had to the judgment rendered by Hon'ble Assam High Court in the case of Tolaram Daga v. CIT(1966) 59 ITR 632 (Assam). The AO himself is found to have accepted the correctness of sale amount by admitting the declared sales at Rs. 8,33,25,882. It is not the case of Revenue nor has been found by the AO that the sales effected by the employees are not at the rate displayed on the shops nor is the case that the daily sales effected are more than the amount remitted at the central office or recorded in the books of account. It is also not the case of Revenue that other persons engaged in the similar business in the area have sold the similar goods at a hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-s. (2), have not been regularly followed by the assessee, the AO may make an assessment in the manner provided in s. 144. The AO, however, has not recorded any finding so required by the statute nor the learned CIT(A) is found to have recorded any such finding as envisaged under sub-s. (3) of s. 145. The finding reached by the learned CIT(A) that all the sales claimed cannot be established because of lack of vouchers is also without any good basis. The same also is set aside, as the AO himself has accepted the sale value disclosed by the assessee. I, therefore, do not find any factual or legal justification in rejecting the book results and estimating income by applying higher profit rate than that was declared by the assessee. Accordingly, the profit rate declared at 3.11 per cent by the assessee is directed to be applied on the declared sales of Rs. 8.33,25,882 as against modified rate applied by learned CIT(A). Thus, the grounds raised by Revenue in appeal stand dismissed and those raised by assessee stand allowed." 9. Since there was a difference of opinion between the learned Members of the Bench and Third Member was nominated by the Hon'ble President of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 6,17,34,456/- and the Assessing Officer despite rejecting the books of account, accepted the sales declared by the assessee and had applied the net profit rate of 8% on the declared sales. Consequently, the Assessing Officer made the addition of Rs. 24,70,797/-, as against the net profit shown by the assessee from the business at Rs. 24,67,959/-. The Assessing Officer rejected the book results on similar grounds as that those in assessment year 2008-09 and the learned CIT (Appeals) upheld the order of the Assessing Officer following his own order passed in assessee's own case for assessment year 2008-09. It is admitted by the learned representatives of both the parties that the facts of the present year are similar to that of assessment year 2008-09 and rival contentions are also same. In that view of the matter, the findings given by us in ITA No. 877/Chd/2012 shall also apply to this appeal with equal force. For the detailed reasons given therein, we allow the appeal of the assessee and delete the impugned addition of Rs. 24,70,797/-. 14. The appeal of the assessee in ITA No. 225/Chd/2013 is allowed. 15. In the result, both the appeals of the assessees are allowed. 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