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2017 (1) TMI 1443 - AT - Income TaxAddition on account of disallowance of jewellery making charges of the equal amount - Held that:- This addition is made by the AO without calling for the explanation of the assessee. CIT(Appeals) on proper appreciation of the facts and material on record, correctly observed that there is no specific requirement to mention the jewellery making charges in the sale bills so as to ensure that same are considered allowable or considered as genuine expenses. The assessee maintained proper records and satisfied the CIT(Appeals) that this addition is wholly unwarranted. CIT(Appeals) also did not approve rejection of the books of account under section 145(3). The assessee has maintained proper records and movement of the stock and TDS has been deducted on jewellery making charges wherever applicable. Therefore, the disallowance made by the Assessing Officer was highly unjustified which have been correctly deleted by the ld. CIT(Appeals). This ground of appeal of the revenue has no merit. Addition made merely on account of low GP rate - Held that:- Addition is made merely on account of low GP rate. However, the ld. CIT(Appeals) did not justify the rejection of the books of account under section 145(3) of the Income Tax Act on which no specific ground have been raised by the revenue. In preceding assessment year 2008-09, on the basis of same method of accounting, the Assessing Officer accepted the GP rate disclosed by the assessee, therefore, Assessing Officer should follow rule of consistency and on the same method of accounting, merely on low GP rate, such addition should not be made. Since the assessee maintained the books of account on the same accounting method as of the preceding assessment year as well as in assessment year under appeal, therefore, there was no basis for making the addition against the addition particularly when no specific defects have been pointed out in maintenance of the books of account and that ld. CIT(Appeals) did not approve rejection of the books of account. In these circumstances, we do not find any infirmity in the order of the ld. CIT(Appeals) in deleting the addition. This ground of appeal of the revenue is also dismissed. Addition u/s 68 - Held that:- CIT(Appeals) on going through the report of DDIT (Investigation) Kolkata noted that facts have been verified by the Assessing Officer and no adverse inference was drawn in consultation with DIT (Investigation) Ludhiana. The report of the Assessing Officer as highlighted in the appellate order shows that after elaborate inquiries conducted by Investigation Wing at Kolkata, the identity, creditworthiness and genuineness of various share application companies could not be said to be doubtful so much so that no adverse inference from the same could be drawn. The ld. CIT(Appeals), therefore, noted that under these circumstances, the Assessing Officer had not mentioned the detailed proceedings in the assessment order therefore, nothing was found adverse against the assessee to show whether it was accommodation entry. The ld. CIT(Appeals), therefore, noted that there is no adverse material available against the assessee on record so as to make the addition. The ld. CIT(Appeals) relied upon several decisions in his findings in order to come to the finding that addition is wholly unjustified. The ld. CIT(Appeals), considering the totality of the facts and circumstances and report of DDIT (Investigation) Kolkata, deleted the entire addition. Genuineness of the investment in capital of assessee company - Held that:- As during the course of search, no adverse material was found against the assessee of receiving any accommodation entry. Therefore, when no adverse material was found against the assessee, where is the question for ld. CIT(Appeals) to correct the error in the assessment order. The ld. CIT(Appeals) has corrected the error in the assessment order by deleting the addition because Assessing Officer has not mentioned the details of investigation conducted by him through Investigation Wing at Kolkata in assessment order without any justification. The ld. CIT(Appeals) rightly considered the entire material for the purpose of deleting the addition. Why the Kolkata parties have made investment in the assessee company is not relevant because these parties have confirmed in making investment in assessee company by producing sufficient evidence before Investigation Wing, Kolkata. Decisions relied upon by ld. DR are, therefore, not applicable to the facts of the case. In this view of the matter, we do not subscribe to the view of ld. DR that matter may be remanded to the ld. CIT(Appeals) for further investigation and determination of the issue. We, therefore, do not find any merit in the departmental appeal on this issue. Ground Nos. of the appeal of the revenue dismissed.
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