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TMI Blog2020 (7) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... essee cannot plead non-maintenance of stock register. Being the first year of operation cannot be a ground for non-maintenance of proper books of accounts. Therefore, in the entirety of facts and circumstances of the case, we uphold the rejection of books of accounts under section 145(3) of the Act and the ground of appeal so taken is rejected. Once the books of accounts are rejected, the AO is required to estimate the gross profit in the hands of the assessee and for the purposes, the prior history of the assessee in his own case or contemporaneous third party data has been held as a reliable basis for estimation of profits. In the instant case, this being the first year of operation, one has to consider the comparable third party data of assessee engaged in similar line of business pertaining to year under consideration. In absence of any contemporaneous data available on record, we decline to interfere in the findings of the ld CIT(A) where he has already reduced the trading addition to ₹ 2,59,620/- from ₹ 5,18,728/- made by the AO and the fact that the Revenue is not in appeal against the said findings and the ld DR has supported the said findings. Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al etc, all the purchases are made from the government departments and it is not practicable to maintain the sale bills being sales made to the consumers on retail basis having petty value. The books of accounts had been audited by the Chartered Accountant u/s 44AB of the Income Tax Act, 1961. Stock details are not required being no opening and no closing stock remained in the Profit Loss a/c. All the goods traded by the assessee are duly controlled by the government, quantity of stock is maintained as per the norms of the Excise Department. The purchases of liquor are made from the State Govt. Deptt. and the prices are also fixed by the State Govt. Further, all the purchase bills and ledger accounts were produced before the AO in the course of assessment proceedings and no single defect had been pointed out by him. All the cases relied upon by the Ld AO are very old and are having no relevance with the liquor business. Hence keeping in view of the above submissions, the ld.AO erred in rejecting the books of accounts of the assessee u/s 145(3). It was further submitted that though this ground was taken before the ld CIT(A) and written submissions were filed, however, the ld CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly, reliance was placed in case of Sh. Dharm Gopal vs. ITO, Ward-03, Bharatpur vide order dated 11.12.2018 for A.Y 2016-17 wherein under the similar facts and circumstances, the assessment was completed u/s 143(3) by applying profit rate of 2% on the total turnover of ₹ 2,51,86,280/-. It was accordingly submitted that the Assessing Officer was not justified in applying the GP rate of 10% and making huge trading addition of ₹ 5,18,728/-. It was further submitted that though the ld. CIT(A) has stated that the AO applied GP rate of 10% on estimate basis without giving any reference to comparable cases, but he himself applied arbitrarily applied GP rate @ 9.51% as compared to 9.02% declared by the assessee. It was accordingly submitted that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) may be deleted. 5. Per contra, the ld. DR submitted that the case of Sh. Deepak Sharma was brought to the notice of the AO and ld CIT(A) by the assessee himself wherein the AO had applied the GP rate of 9.5%. Therefore, taking the said comparable case into account, the ld. CIT(A) has estimated the GP rate of 9.51 as against 9.02% declared by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account is just. Here, the assessee even does not maintain the stock register, in the case of non maintenance of stock register application of section 145 has been held justified in the case reported at 11 ITR 923 (Orissa), 114 ITR (Bom) 38 ITR 579 (SC). The A/R of the assessee admitted to have not maintained any day- to - day Stock Register, Stock Register, Sales vouchers, Expenses vouchers, the Expenses claimed have been booked on the basis of self made vouchers and sales are not verifiable. Since, the assessee has not properly maintained the Stock Register, Sales Vouchers and Vouchers for expenses shown in trading and P L a/c, the books of account maintained by the assessee are not reliable. As per order sheet entry dated 14.11.2017 the AR of the assessee was asked that proper books of account were not maintained and why not your books of account will be rejected u/s 145(3). In view of the above discrepancies and legal position the trading results declared by the assessee are rejected invoking the provisions of section 145(3) of the IT Act. 7. We therefore find that during the course of assessment proceedings, the assessee was asked to submit his books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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