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TMI Blog2018 (12) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is bad in law and liable to be quashed. 2. That on facts and in the circumstances of the case and law applicable provisions of section 145(3) of the I.T. Act are inapplicable and consequently upholding by the learned Commissioner (Appeals) of rejection of book results u/s. 145(3) of the I.T. Act made by the AO is not valid and not in accordance with the provisions of law. 3. The learned Commissioner (Appeals) has erred in upholding the application of net profit rate of 1.5% as against declared N.P. rate of 0.19% and consequentially confirming the trading addition of Rs. 21,12,644/- (addition made by the AO Rs. 37,29,387/- minus addition deleted by Commissioner (Appeals) Rs. 16,16,743/-) to the total income of the assessee company. On facts and circumstances of the case and law applicable, the sustenance of net profit rate of 1.5% as against declared NP rate of 0.19% and consequentially sustaining trading addition of Rs. 21,12,644/- is erroneous and unjustified and in the alternative it is highly excessive. 4. That the appellant craves leave to add, alter, amend or substitute one or more grounds of appeal as and when needed." 4. Ground No. 1 of the appeal is general in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when the Assessing Officer has not pointed out any specific defects in the books of account and only objection of the Assessing Officer is regarding the claim of payment of freight charges to the truck/lorry owners. The ld. CIT(A), though, confirmed the rejection of books of account, however, the income estimated by the Assessing Officer by applying N.P. rate @ 2.5% was restricted to 1.5%. Hence, the ld. CIT(A) has partly granted relief to the assessee on the quantum of the addition. 7. Before us, the ld AR of the assessee has submitted that the assessee has been maintainable proper and regular books of account which has been audited by the qualified auditors and therefore, when no defect was pointed out by the auditor in the books of account as well as no specific defect was pointed out by the Assessing Officer in the books of account then the rejection of the same is not warranted as per provisions of Section 145(3) of the Act. The ld AR has further submitted that even regarding the freight payment, the assessee produced the details of the vehicle owners together with PAN of each and every owner and on the basis of those details, the Assessing Officer issued notice to the vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt and payment of the freight for each and every bill as well as vehicle then the claim of freight payment is otherwise cannot be disallowed or doubted. The ld AR has submitted that the Assessing Officer and the ld. CIT(A) has followed the decision of this Tribunal in the case of Om Prakash bansal Vs. ITO order dated 05/6/2015 in ITA No. 734/JP/2012 whereas the facts of the said case are distinguishable and the finding in the said case is specific to the facts of the said case and cannot be applied in general and particular to the case of the assessee. In the said case, the assessee did not issue or maintain any receipt or voucher and was involved in transportation of cement. He has referred to the order of the ld. CIT(A) and submitted that the ld. CIT(A) has admitted the fact that the assessee have been maintaining books of account and produced the record of the vehicle number and Registration certificate. The ledgers of each person to whom the freight charges have been paid by the assessee has been maintained on the basis of vehicle number and name appearing in the registration certificate of the vehicle. The ld. CIT(A) has accepted the fact that each payment of freight can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment by the assessee on the ground that the assessee has made the payment of freight in cash for which the assessee has produced self made vouchers and therefore, in absence of confirmation from the recipient, this claim of the assessee was not acceptable. We note that the entire payment of freight is not in cash but only the part of the payment is in cash. However, once the assessee has established this fact with the entries recorded in the books of account particularly in the ledger account of the parties to show that each payment of freight is linked to the freight income booked by the assessed in respect of a particular trip then the claim of the assessee of payment of freight cannot be rejected or disallowed merely on the ground that the assessee has made some payment in cash for which the self made vouchers were produced by the assessee. The relevant finding of the ld. CIT(A) on this issue in para 4.3 as under: "4.3 I have gone through the assessment order, statement of facts, grounds of appeal and written submissions carefully. It is seen that the assessee supplies trailers to main contractors (transporters) who issue builty/consignment notes at the time of loading goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of vehicle number and name appearing in RC of the vehicle. In the voucher prepared for payment of freight in cash, the appellant writes vehicle number, amount paid and obtains signature of the recipient (driver / owner of the vehicle). In the bills issued by the appellant for the freight charges received by him, name of the party (main transporter), vehicle number, destination of the vehicle (from & to) and amount of freight in respect of each trip and date of each trip are mentioned. The appellant has furnished statement linking each freight payment with the corresponding freight income (trip register) booked by the appellant to show that there is no freight payment without any freight income against that payment. The appellant obtains copy of PAN Card and RC from each person whom the payment of freight is paid by the appellant. I have gone through each document furnished by the appellant carefully. The contention of the appellant that its each payment of freight can be linked to freight income booked by him in respect of that particular trip is found to be correct. Still, the possibility of freight payment shown to have been made in cash having been inflated by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese disallowances cannot be a reason for rejection of books of account. Accordingly, when the assessee has been maintaining regular books of account duly audited by the qualified auditor then in absence of specific discrepancy or deficiency in the books of account, the provisions of Section 145(3) of the Act cannot be invoked. Hence we hold that the Assessing Officer was not justified in rejecting the books of account merely because the assessee could not file the confirmation from the parties to whom the freight charges were paid. Hence, this ground of assessee's appeal is allowed. 10. Ground No. 3 of the appeal is regarding the estimation of income by applying the NP rate. This issue is consequential in nature and therefore, in view of our finding on the issue of rejection of books of account, this ground becomes infructuous. Since the Assessing Officer has doubted the claim of freight payment as the assessee has not filed any confirmation and the parties have not responded to the notice issued by the Assessing Officer U/s 133(6) of the Act, therefore, the issue of allowability of the said claim can be reexamined by the Assessing Officer only to the extent of scope of any infla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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