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TMI Blog2017 (2) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of this appeal." 2. The facts in brief of the case are that, the assessee, an individual, was engaged in the business of installation and commissioning of power related instruments and equipments, carried out in the name of 'M/s High Precision Corporation', Delhi. For the year under consideration, the assessee filed return of income on 30/09/2008, declaring total income of Rs. 3,99,79,653/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short 'the Act') was issued and served within the stipulated period. In the assessment completed under section 143(3) of the Act on 30/12/2010, the Assessing Officer assessed the income of the assessee at Rs. 5,38,64,192/- after making certain additions/disallowances to the returned income. 2.1 Aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals), who allowed the appeal partly. Aggrieved with the order of the learner Commissioner of Income-tax (Appeals), the Revenue is in appeal before the Tribunal raising grounds as reproduced above. 3. In ground No. 1(ii), the Revenue has challenged reduction of gross profit rate to 20.78% by the learned Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the learned Commissioner of Income-tax (Appeals) allowed part relief to the assessee. Against the said part relief in gross profit rate allowed to the assessee, the Revenue is in appeal. 3.2 Before us, the learned Senior Departmental Representative, relying on the findings of the Assessing Officer, submitted that in view of the defects in maintenance of vouchers and payments to creditors and no closing stock reflected in the books of accounts, the estimation of gross profit at the rate of 25% was a reasonable and same might be upheld. 3.3 On the other hand, the learned Authorized Representative of the assessee submitted that rejection of books of accounts in absence of maintenance of stock register was not justified and no defects have been pointed out specifically by the Assessing Officer. In support of the contention that books of account cannot be rejected merely due to nonmaintenance of day-to-day stock register, the learned Authorized Representative of the assessee relied on the judgment of the Hon'ble High Court of Punjab and Haryana in the case of Jhandu Mal Tara Chand Rice Mills Vs. Commissioner of Income Tax, reported in 73 ITR 192. 3.4 We have heard the rival su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of account of the assessee in their books of accounts. In the copy of account furnished by M/s Fastech Telecommunication Pvt. Ltd. in response to notice under section 133(6) of the Act, opening and closing balance in the Ledger account of the assessee was shown at nil and sales of Rs. 30,00,400/- were debited and receipts of Rs. 30,00,400/- (Rs.12,00,160 + Rs. 18,00,240) were credited. As against the entries in Ledger account of the assessee in the books of accounts of M/s Fastech Telecommunication Pvt. Ltd., in the Ledger account of M/s Fastech Telecommunication Pvt. Ltd. in the books of accounts of the assessee, the opening balance was shown at Rs. 2,10,02,800/-, payment by cheques on different dates was shown at Rs. 67,25,400/- and closing balance as on 31/03/2008 was shown at Rs. 1,72,70,800/-. 4.3 Similarly, in the Ledger account of the assessee in the books of M/s Scientech Technology Private Limited, no transaction with the assessee was shown, whereas in the Ledger account of M/s of M/s Scientech Technology Private Limited in the books of account of the assessee, opening balance of Rs. 1,46,51,600/-, payment by cash of Rs. 10 lakhs and by cheque of Rs. 9,25,000/- and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebit note No. 255/05-06 dated 29/10/2005, amounting to Rs. 2,46,51,600/-. In view of submission of the assessee, the learned Commissioner of Income-tax (Appeals) held the liabilities outstanding in the books of account of the assessee in respect of the two parties could not be held as remission/cessation of the liability for the following reasons: "(i) The circumstances under which cessation of a liability may occur have been clarified by the Hon'ble SC in the case of Sugauli Sugar Works (supra). In the books of accounts of the appellant these liabilities were created in pursuance of the respective invoice/debit note details of which have been mentioned above. This invoice/debit note has not been held to be false. In the books of accounts' of the appellant, liabilities towards both the parties have been shown as outstanding liabilities i.e. there is neither any discharge of the liabilities by the appellant; nor is there any contract between the appellant and the creditors with regard to their cessation/ remission. (ii) In the books of accounts of the creditors, they have neither shown any opening balance nor any closing balance due from the appellant. Thus even as per the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (P.) Ltd, 236 ITR 516 wherein it has been held that there cannot be any cessation/remission of the liability by the unilateral Act of the debtor. He further relied on the order of the Tribunal in the case of Madan Lal & Bros. Vs. ACIT, circle Faridabad in ITA No. 908/Del/1995. 4.13 Thirdly, supporting the order of the learned Commissioner of Income-tax (Appeals), it was submitted that books of accounts have been rejected and the gross profit rate has been estimated in the case of the assessee, then in such circumstances, no further addition under section 41(1) of the Act was required. In this connection, the learned Authorized Representative, relied on the following decisions: (i) Indwell constructions, reported in (1998) 232 ITR 776 (AP); (ii) Bhandari Lal Bansi Dhar, reported in (1998) 229 ITR 229 (All); (iii) M/s. Exim Cargo Kare, in ITA No. 5134/ Mum/2011(Trib.)(Mum.) 4.14 We have heard the rival submissions and perused the relevant material on record. We have also gone through the provisions of section 41(1) of the Act. We find that under the provisions of section 41(1) of the Act, following benefits obtained by the assessee are brought to tax: (i) any amount obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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