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2019 (5) TMI 1704 - ITAT JAIPURRejection of books of account - invoking provisions of section 145(3) and consequential trading addition by applying GP rate of 0.80% - HELD THAT:- Merely because the assessee has not given the full particulars of the purchaser on the cash sale bills when the quantity as recorded in the books of account is not in dispute, then the sale transactions of the assessee without any other contrary record or finding cannot be doubted. AO has also doubted the genuineness of the godown rent, however, for rejection of books and estimation of income by applying the GP, the said item is not relevant as it is not part of the trading account. We find that the minor adverse remarks by the AO without pointing out a specific and material defect in the books of account cannot be a reason for rejection of books even otherwise if the claim of expenditure is not found to be genuine otherwise the same can be disallowed but it cannot be a reason for rejection of books of account. AO was not justified in rejecting the books of account by invoking the provisions of section 145(3) and consequent estimation of income by the AO by applying the GP as declared in the immediately preceding year without considering the average of past history which should be at least 3 to 5 years. Hence the orders of the authorities below qua this issue are set aside and the trading addition made by the AO is deleted. Adhoc disallowance - assessee has not controverted the findings recorded by the AO that the assessee has not produced any bill/voucher for verification of the AO - HELD THAT:- When the expenditure claimed by the assessee are not supported by the proper bills and vouchers, then the assessee has failed to discharge its onus to establish that the expenditure has been incurred wholly and exclusively for the business of the assessee. CIT (A) has restricted this disallowance to ₹ 50,000/- which we find as proper and reasonable having regard to the facts and circumstances of the case. Accordingly, we do not find any error or illegality in the impugned order of ld. CIT (A) qua this issue. Addition u/s 68 on account of unsecured loans treated as unexplained cash credit - HELD THAT:- Once the AO has brought on record all these material to show that the transactions of loans are not genuine, then the burden was shifted on the assessee to controvert the said material brought on record by the AO. The assessee has not produced any contrary material to controvert the evidence brought on record by the AO. Further, we note that the assessee never demanded cross examination of Shri Anand Sharma but raised this plea first time before us. Even otherwise the finding of the AO as well as of the ld. CIT (A) is not based solely on the basis of statement of Shri Anand Sharma but it is based on the investigation carried during the assessment proceedings as well as first appellate proceedings before the ld. CIT (A). As regards the decisions relied upon by the assessee in the case of Kota Dall Mills and other decisions of Coordinate Bench of this Tribunal, we find that in those cases the AO did not conduct any enquiry but relied upon the report of the Investigation Wing, Kolkata based on the search conducted in the case of Shri Anand Sharma. Therefore, the said decisions cannot be applied in the facts of the present case where the AO has conducted due and proper enquiry and the findings of the AO and ld. CIT (A) are based on the evidence in the nature of enquiry conducted. - Appeal of the assessee is partly allowed.
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