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TMI Blog2021 (7) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... are rejected then it cannot be said that it shall be good for one purpose and not for other and, therefore, no separate addition of alleged fictitious liability and additionunder section 41 of the Act can be made. Therefore, we delete both additions . - ITA No.1009/AHD/2015 - - - Dated:- 22-6-2021 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Sapnesh Sheth, CA For the Revenue : Ms Anupama Singhla, Sr. DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee pertaining to assessment year (AY) 2004-05, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals)-1, Surat [in short the ld. CIT(A) ] in Appeal No. CASI/ 130/2013-14 dated 11.02.2015, which in turn arise out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 254 of the Act (hereinafter referred to as the Act ). 2. Grounds of appeal raised by assessee are as follows: 1. On the facts and in the circumstances of the case, the learned CIT (A) has grievously erred in holding that sufficient opportunity of being heard has been given to the appellant by the Ld.AO. 2. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been de facto in substance leased out. However in order to avoid any legal complication arising out of tenancy the amount received as lease rent was shown as job work charges under the head 'Income' and Income from textile business house under the head 'Other Income'. However, since the assessee had shown job work income in the books of account they had to maintain the excise records reflecting the job work activity. It was further stated that during the course of assessment proceedings, they had submitted the extracts of the excise records vide their submission dated 08.12.2006 reflecting the details of production, which in fact was not done by the assessee. The assessee only received the lease rentals by giving the factory on lease. Regarding power consumption the assessee filed copy of invoice raised to various parties against recovery of power bills. Further the assessee submitted various details viz. quantitative records of trading of chemical, activity wise trading account with comparative figures, ledger account of salary paid to workers in the textile unit, bills, vouchers, sale bills, purchase bills etc. The details furnished by the assessee have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rving as follows: 5.6.1 After going through the submission made by the appellant inter alia comments of the Ld. AO, it is but obvious that the appellant has fabricated the books of accounts and the same deserve to be rejected u/s 145(3) of the Act and, therefore, the action of the AO with regard to rejecting books of accounts is upheld. Now, the question comes as what should be the estimation of profit. The appellant himself admitted that it had received ₹ 15,58,500/- as lease rent income (shown as textile income) from different parties viz M/s. Kartik Enterprise, M/s. Status Synthetics and M/s. Diamond Rayons. Against this, in the account submitted vide written submission dt. 14.11.2014 in respect of Texturizing Division the appellant has shown lease income at ₹ 8,75,000/-. Thus, there is a clear-cut suppression of income to the extent of ₹ 6,83,500/- (15,58,500 -,8,75,000). In order plug any other revenue leakage the addition is sustained to the extent of ₹ 10,00,000/-. In view of this, addition of ₹ 10,00,000/- is sustained and the balance of addition of ₹ 43,35,130/- (₹ 53,35,130 - ₹ 10,00,000) is ordered to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 16,15,745/- under section 41 of the Act. 14. We note that assessing officer has rejected the books of accounts of the assessee under section 145(3) of the Act and gross profit of the assessee was estimated at average gross profit rate of last two years which comes to 22.64% (19.81 + 25.46%). Accordingly, the gross profit is worked out at ₹ 53,35,130/- by assessing officer (being 22.64% of the turnover) and same was added to the total income of the assessee. On appeal, ld CIT(A) upheld the rejection of books of accounts stating as follows: ..the appellant has fabricated the books of accounts and the same deserve to be rejected u/s 145(3) of the Act and, therefore, the action of the AO with regard to rejecting books of accounts is upheld. After upholding the rejection of books of accounts, the ld CIT(A) has further reduced the gross profit estimation. 15.From the above facts it is abundantly clear that books of accounts of the assessee were rejected by the assessing officer and on appeal, ld CIT(A) upheld the rejection of books of accounts and reduced the profit estimation. We also upheld the order of ld CIT(A), so far rejection of books of accounts are conce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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