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TMI Blog2016 (10) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... io of law. The ld.CIT(A) miserably failed to appreciate the facts in right perspective. Therefore, on detailed analysis of the facts considered by the AO, and the manner in which ld.CIT(A) has appreciated them in the finding recorded in para.43, we are of the view that the ld.CIT(A) has failed to appreciate the facts in right perspective and erred in upholding the book results of the assessee. Ground no.1 is allowed and rejection of the books at the end of the AO is restored. Quantification of the GP - Held that:- Exercise made by the AO was not correct. The ld.CIT(A) has rightly pointed out actual difference of fall in the GP should be ₹ 69,90,011/-, and this is the reason, the Revenue has also taken this amount in its ground of appeal. - ITA.No.2200/Ahd/2011 - - - Dated:- 7-10-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Revenue : Shri James Kurian, Sr.DR For The Assessee : None ORDER PER RAJPAL YADAV, ACCOUNTANT MEMBER Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-V, Surat dated 10.5.2011 passed for the Asstt.Year 2008-09. 2. This appeal was listed on the board for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the order of the AO. 4. It is, therefore, prayed that the appellate order of the ld.CIT(A) may be cancelled and the order of the AO may be upheld. 5. Out of the above grounds, ground no.3 and 4 are general grounds of appeal, which do not call for recording of any specific finding. The ground nos.1 and 2 are inter-connected with each other. Under ground no.1, it has to be decided whether books of accounts of the assessee were reliable and ought not to have been rejected by the ld.AO. If the books are to be rejected, then what addition could be made in the total income of the assessee. This aspect has been challenged in ground no.2. 6. We take both these grounds together. 7. Brief facts of the case are that the assessee is firm engaged in the business of development residential township. It has filed its return of income on 27.9.2008 declaring total income at ₹ 2,52,67,993/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. A survey under section 133A was carried out at the premises of the assessee on 13.9.2007. During the course of survey, the Department laid its hand on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Whiteline Chemicals in ITA No. 3509/A/2004 is not applicable. [g] The assessee claims that even if there was fall in G P it is entitled to have a set-off against the income disclosed as the assessee is entitled to telescope the fall in Gross Profit against the income disclosed. [h] The decision of the Whiteline Chemicals is not applicable since in that case the assessee had profit during the pre Survey period and had shown a huge loss wiping off the profit in a pre-survey period . In the case of assessee the profit in post survey period is higher than profit in pre-survey period. The assesses has filed the G P working for pre - and post survey period. The GP working is reproduced as below :- G P working for Pre and Post survey period( date of survey 11. 09.2007). DEBIT Pre survey Amount Post survey Amount CREDIT Pre survey Amount Post survey Amount To Opening work in progress 84,81,968 4,05,44,500 By sales flats Shops 3,14,55,675 9,53,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce between the GP declared by the assessee as well as calculated by the AO could be ₹ 69,90,011/-. The finding of the CIT(A) about pointing out incorrect computation of the amount has been recorded in para 6.3 of the order. It is pertinent to take note of this finding: 6.3. I have carefully gone through the submission of appellant and assessment order. There is a mistake in working of amount of ₹ 1,37,99,000/- on page 20 of the assessment order. The Assessing Officer has worked out the Gross Profit of the year at ₹ 1,77,46,2637- by applying Gross Profit rate of 14% of A.Y. 2007/08 and made the deductions as under : 1. Gross Profit of A.Y. 2007/08 @ 14% of ₹ 12, 67, 59, 025/- - ₹ 1,77, 46, 263 2. Disclosure - ₹ 2,13,20, 000 Total ₹ 3, 90, 66, 263 3. Income shown in the e-return filed on 27.09.2008 - ₹ 2, 52, 67, 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government may notify in the official gazette from time to time, the Accounting Standard required to be followed by any class of Assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of accountancy followed by an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time. Sub clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income, on the basis of method of accountancy followed by an Assessee than he can reject the book result and the assess income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. 12. For exercising the best judgment, section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee about his business, the previous history of the assessee or the similarly situated assessee. It is also pertinent to mention that judgment is a faculty to decide matter with wisdom, truly and legally. Judgment does not depend upon the arbitrary, caprice of an adjudicator, but on settled and invariably principles of justice. Thus, in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee. 14. In the light of the above, let us examine the facts of the present case. There is an old dictum falsus in uno, falsus in omnibus . Considering this old dictum, Hon ble Calcutta High Court in Amal Kumar Chakraborty vs. CIT (1994) 207 ITR 376 (Cal) has observed that though this dictum is applicable in criminal law, but is a sound principle to apply in taxation when the matter is one of finding of fact on the basis of statements of a witness and their judicial evaluation. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason given by the AO is that the assessee failed to submit primary records exhibiting the details of expenses. While dealing with this aspect, the ld.CIT(A) has made reference to the judgment of Hon ble Allahabad High Court in the case of Nisar Biri Sikka No.1 Vs. CIT, 174 TAXMANN 51 and also observed that books of accounts cannot be rejected on the ground that labour payment made by self-made vouchers and register bearing thumb impressions of the workers. If this reasoning is being analysised with the finding recorded by the AO, then it would find that the AO has not rejected the books for this reason. The case of the assessee is that the assessee has accepted receipt of money on sale of flats. The sale consideration was unrecorded in the books. Similarly, it has incurred expenditure without recording in the regular books. When the AO has verified the primary details showing the incurrence of expenditure, then the assessee failed to submit those details and failed to reconcile the expenditure. The moment the assessee has accepted receipt of on-money of more than ₹ 2.13 crors then, factually it would have been inferred by the AO that expenditure might have been incurred ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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