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TMI Blog2019 (11) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... ade and sustained by the ld. CIT(A) is hereby directed to be deleted and the appeal of the assessee is allowed. - ITA No. 445/JP/2018 - - - Dated:- 4-11-2019 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Rajnikant (CA) And Shri S. R. Sharma (CA) For the Revenue : Shri Rajendra Singh (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-2, Udaipur dated 18.01.2018 wherein the assessee has taken the following grounds of appeal:- 1. That on the facts and in the circumstances of the case the Ld. CIT(A) is wrong, unjust and has erred in law in confirming rejection of books of accounts of the appellant by the assessing officer u/s 145(3) of the I.T. Act, 1961 on the ground that purchase to the extent of ₹ 1,83,68,232/- are allegedly not genuine and not verifiable. 2. The ld. CIT(A) is further wrong and has erred in law in confirming addition to the extent of ₹ 45,92,058/- being 15% of alleged unverifiable purchases referred to in ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of cross-examination which is a nullity in the eyes of law and therefore, the same should be quashed. It was further submitted that the Assessing Officer has not disbelieved the purchases made by the assessee but only disbelieved the purchase vouchers. The trading account as such has not been disturbed as opening stock, closing stock and sales as declared have been accepted and the Assessing Officer has only doubted the sellers from whom the purchases have been made by the assessee company. Reliance was placed on the Hon ble Gujarat High Court decision in case of CIT vs. Sathya Narayan P. Rathi (2013) 351 ITR 350 and it was submitted that books of account produced clearly indicate the purchase of goods and subsequently used in manufacturing of goods which were sold and exported out of India which could not be if there are no purchases and so the ratio of above judgment is fully applicable to the case of appellant. Further, reliance was placed on the Co-ordinate Bench decision in case of Bhuramal Raj Mal Surana vs. DCIT in ITA No. 4091/JP/2012 dated 15.12.2012 wherein it was held that where the Assessing officer doubted the genuineness of the purchases on the ground that the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of books of accounts and results so declared therein is confirmed. Given that the books of accounts have been rejected, the Assessing Officer is required to make the assessment on the basis of best judgment instead of resorting to making the addition to the book results. The Assessing officer while exercising his jurisdiction cannot act arbitrarily or capriciously. The assessment must proceed on judicial considerations in light of relevant material available on record. In other words, in any case of best judgment, though the element of guess work is involved, however the guess work should have nexus with the material on record and discretion must not be exercised arbitrarily or capriciously. For the purposes of making the best judgment assessment, past history of the assessee has been held as reliable and reasonable basis for estimation of profits. Alternatively, comparable cases in the similar line of business should be considered. In the instant case, being the first year of operations, past history is not relevant and hence, considering the comparable case of M/s Kedia Exports Pvt. Ltd., which has declared the GP rate of 10.04% as against 11.41% declared by the assessee, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxman 298 held that issue decided by this is in the realm of appreciation evidence. The find of Tribunal as mentioned in this judgment is as under:- However, in our opinion the observation of the Assessing Officer that the assessee was prima facie required to prove the genuineness of the transaction and identity of the creditors is not misplaced because there is no distinction laid between the trade creditor and the non-trade creditor and we are further of the opinion that in case the assessee claims liability of payment to the trade creditors shown in the balance-sheet, the assessee is definitely required to prima facie prove the identity of the trade creditors as well as the genuineness of the transaction. In this case, admittedly the assessee has neither been able to disclose the complete addresses of the trade creditors nor is able to give the complete addresses of the consignors nor the name has been mentioned on the challan forms, so the verification of the same by the Assessing Officer became totally impracticable on account of lack of this complete information supplied by the assessee. It means that the assessee failed in establishing the genuineness of the so called trad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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