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2005 (12) TMI 236 - ITAT JODHPURNon-maintenance of stock register - quantitative details of grey cloth and finished goods - Provisions of s. 145 - Accounts - GP rate - trading addition - HELD THAT:- In our opinion the assessee has been able to explain the fall in GP rate, by referring to steep increase in turnover, which he could achieve by reducing the selling price and paying more discount. He maintained quantitative details of grey cloth and finished goods. All the processes involved right from washing to finishing are got done from outside parties. The ld AR demonstrated the whole series of process involved by referring to marked lot number to the Thans, to demonstrate and explain that the cloth remained the same throughout. He also demonstrated the expenses involved for each process in a series. Therefore, we are convinced that the GP rate declared by the assessee cannot be disturbed. The learned CIT(A) has accepted the claim of the assessee in principle but he applied his own magic number of 11 per cent simply on ad hoc basis. Therefore, we are of the considered opinion that no addition in this account can be made without any specific defects having been pointed out in the books of account of the assessee, which according to us gave a correct picture of his income. Hence, we accept the ground taken by the assessee and reject the ground taken by the Department in this respect. Meaning thereby Ground NO.1 of the assessee's appeal is accepted and Ground No. (iii) of the Department's appeal is dismissed. Disallowance of 1/5th of total expenses - claimed under various heads that is travelling expenses, shop expenses, vehicle repairing and vehicle expenses, depreciation on vehicle and postages - We agree with learned Authorised Representative Shri Bhansali, that there is no evidence on record to print out any non-business user but at the same time we agree with learned Departmental Representative that the total non-user by the assessee for personal purposes other than business purposes cannot be ruled out in' the given circumstances. So, to meet the ends of justice and to strike a balance, it would be fair and reasonable if the disallowance is further reduced to 1/10th and thus the ground taken by the assessee stands partly allowed. In the result, the appeal of the assessee is partly allowed. Deletion out of processing charges - We are convinced with the arguments of learned Authorised Representative that the statements of Shri Mool Chand have to be read in its entirety. When the statement of Shri Mool Chand is read in its entirety, a clear inkling is given that the assessee has got processed in the name of M/s Sangam Enterprises and also paid by cheque, to said concern If the other party had manipulated and the assessee is not involved therein and there is no evidence that this money travelled back to the assessee, the claim of the assessee cannot be rejected. In our opinion, the assessee has clearly established that he paid the money to M/s Sangam Enterprises. The statement of Shri Mool Chand has to be viewed with the pinch of salt as he may have stated something adverse to the assessee for his personal gains. Therefore, in view of the uncontroverted facts that the assessee has got the processing by dealing with M/s Sangam Enterprises, who may have got the dyeing done from any other entity be it Punith or Nitesh or Sangam, we confirm the finding of learned CIT(A) and do not allow this ground of appeal. Addition u/s 68 - From the decision of the Tribunal in the case of Dy. CIT vs. K.C. Jhanwar [1995 (6) TMI 76 - ITAT JAIPUR] and the others relied by ld AR, it is clear that the shortage can be allowed at even 5.25 per cent as reasonable in the given facts of a case. The assessee measures lot to lot when the goods finally arrive at the assessee's premises after undergoing the entire processes. The sum total of all the above reasoning go to prove the claim of the assessee. Therefore, in our view the learned CIT(A) has correctly deleted the addition. This ground of appeal also fails. The ground No. (iii) of Department's appeal already stands decided along with the ground of the assessee's appeal. This ground has been dismissed. Expenditure on the "Dalali" - The fact that sales have increased manifold in this year, speaks in favour of the assessee's claims that these two persons really gave a boost to the sales. Sometimes it is neither possible nor advisable to disclose intangible benefits, which accrue to the assessee by carrying out business activities in a particular manner. It is the assessee only who knows how to manage its affairs in a better way. The ld AR has correctly placed reliance on the decision of the Hon'ble Delhi Bench of Tribunal in the case of Survir Enterprises (P) Ltd. vs. ITO [1994 (4) TMI 113 - ITAT DELHI-E] wherein it has been held that although detailed evidences in respect of services rendered were not available, nonetheless services can be rendered when payments have been made and assessed in the hands of the recipients. Therefore, in our considered opinion, when there is no personal relationship with these payees and the payment has been made by the assessee for business consideration, the same is allowable. The findings of the learned CIT(A) is thus upheld. The ground of appeal fails. Unexplained excess credit - This issue could have been resolved by learned AO by referring this statement to assessee and by allowing the assessee to cross-examine him. It appears that nothing of that sort was done by learned AO. Therefore, the claim of the assessee has been rightly allowed by the learned CIT(A). There is no scope for our interference in this finding. In the result, the appeal of the Department stands dismissed.
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