TMI Blog2012 (9) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... are inflated. It was explained before CIT(A) that turnover was pursistently decreasing & there was a stiff competion in the market as market was flooded with the cheap Chinese furniture, therefore, turnover as well as profit was on decreasing side. It is further seen that though assessee has made purchases from few parties in cash however Vat was paid and bills were received & payments has also been made by cheque. Explanation of the assessee can not be rejected in totto. In view of aforesaid and decreasing trend of the profit, trading addition of Rs.40,000/- is sustained that will meet the end of justice - Decided partly in favor of assessee - ITA No.233/JP/2012 - - - Dated:- 28-6-2012 - SHRI R.K. GUPTA J. Appellant by : Shri S.S. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year. The assessee tried hard to maintain turnover of the company by curtailing the goross profit ratio but the assessee could not maintain its turnover even thogh by curtailing the gross profit ration. The assessee was a dealer in furniture items and due to stiff competition with Chinese furniture industry, it had been almost impossible for the trade per se to maintain the gross profit margins which were there in previous years. The market had been flooded with cheap but less quality furniture items imported from china. To maintain its financial position, the company had no option but to reduce its gross profit due to cut throat competition in furniture trading due to availability of cheap Chinese furniture in the market. To comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat all payment had been made in cash, but all the payments were not made in cash. The payments had been made by cheques as well as cash to the abovementioned parties. The details of payment made by cheques and in cash to above mentioned parties during the year were as under : Name of Party Total Payment made during the year (Rs.) Payment made by A/c Payee Cheque Rs. Payment made in cash Rs. Bishnoi Overeseas 10,34,956/- 6,59,836/- 3,75,120/- Flora Decore (India) Pvt.Ltd., 8,15,230/- 2,40,000/- 5,75,230/- From the above chart, it was very clear that all payment had not been made in cash but payment had been made through Account payee cheques as well. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso given in Annexure-D of Form No.3CD for the assessment year 2007-08 which was duly certified by the auditors. As the company was maintaining stock register on computer system and quantitative details had been given along with Form 3CD which comprised of opening Stock, Purchases during the year, Sales during the year and Closing Stock as on 31.03.2007 with valuation of stock, the AO observation for non maintenance of stock records was not correct. As no specific defect had been pointed out by the assessing officer, the provisions of section 145(3) were wrongly applied by the AO. Reliance was placed on decision in the case of CIT Vs Jas Jack Elegance Exports (191 Taxman 386). As regards failure of the assessee to produce the persons to who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases remain unverifiable. However, I feel that trading addition at Rs.1,79,919/- is on hire side. It is seen that AO has not asked the reason for decline g.p.rate, Certified copy of Flora Decor India P.Ltd., and Bishnoi Overseas were filed. Making payment in cash does not attract any trading addition if it is not found that purchases are inflated. It was explained before CIT(A) that turnover the assessee was pursistently decreasing there was a stiff competion in the market as market was flooded with the cheap Chinese furniture, therefore, turnover as well as profit was on decreasing side. It is further seen that though assessee has made purchases from few parties in cash however vat was paid and bills were received payments has also be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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