TMI Blog2013 (8) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... f account and also disallowance of expenses. - Held that:- The AO during the course of assessment proceedings noted that there was a difference in the balance shown in the account of M/s Diwan Steel Industries of Rs.699,980/- and of M/s Regent Steel Industries of Rs.30 lacs, when compared with the copy of account of the assessee in the books of account of the respective parties. The assessee having failed to reconcile the difference except by way of additional evidence, which has not been admitted by us in the paras herein above, the addition made by the AO merits to be upheld in the hands of the assessee. Rejection of books of accounts - application of net profit rate of the earlier year - Held that:- The assessee had failed to produce the books of account before the authorities below and the revised books of account produced by way of additional evidence have been rejected by CIT(Appeals) - there was no alternative left but to estimate the trading income in the hands of the assessee and application of net profit rate to the sales receipts shown by the assessee - Decided against the assessee. - ITA No.10 /Chd/2013 - - - Dated:- 23-5-2013 - Shri T. R. Sood And Ms. Sushma Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and also that the assessee was willing to produce the books of accounts during the course of appellate proceedings to substantiate the various submissions as made before the Worthy CIT(A)." 3. Before addressing the issues raised by the assessee, the facts of the case need to be referred to. The assessee, during the year under consideration had furnished return of income declaring total income of Rs.243,980/- filed on 30.09.2009. The case of the assessee was selected for scrutiny and various notices u/s 143(2) and 142(1) of the Act were issued. The AO also issued questionnaire for compliance to the assessee. Despite repeated notices being issued to the assessee from time to time, no information was furnished by the assessee and only adjournments were sought on some dates. On other dates, none attended the proceedings on behalf of the assessee, nor any application was moved for adjournment. On 23.11.2011, the assessee attended the proceedings alongwith Shri Hukminder Sahi, C.A. for the assessee. However, no information was furnished but request was made for adjournment. The AO asked the assessee to furnish the information as per the questionnaire already issued and further addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the preceding year, resulting in an addition of Rs.268,412/-. Further, an addition was made by way of disallowance of the expenses to the extent of Rs.2 lacs out of total expenditure of Rs.671,872/- as the assessee had failed to produce books of account, vouchers etc. 4. Before the C IT(Appeals), in the written submissions, it was claimed by the assessee that it had taken a cash credit limit from State Bank of Patiala, Mandi Gobindgarh and all the entries relating to the said limit and the applications of such limit were not entered in the regular books of account. The assessee further claims that "we have now made the books relating to such limit only. The books include the balance-sheet and the ledger which are enclosed herewith at pages No. 3 to 12." Thereafter, the assessee tried to reconcile the differences in the account of M/s Diwan Steel Industries by pointing out that cheque payment of Rs.14 lacs was made to the said part y out of the cash credit limit and further purchase of Rs.700,018/- was not reflected in the original copy of account of M/s Diwan Steel Industries. If the entries are merged, the net effect would be 'zero' and the balance thus, stands reconciled. Som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT(Appeals) further upheld the addition of Rs.699,980/- on account of difference in the account of M/s Diwan Steels Industries; Rs.30 lacs in the account of M/s Regent Steel Industries. The CIT(Appeals) also upheld the addition of Rs.268,412/- on account of application of higher GP rate. The CIT(Appeals) further dismissed the ground of appeal raised by the assessee against the addition of Rs.2 lacs on account of disallowance out of expenses debited to the Profit Loss Account. 6. The assessee is in appeal against the order of the C IT(Appeals). Shri Sudhir Sehgal appeared for assessee and Shri N. K. Saini appeared for revenue and put forward their contentions. 7. Ground No.1 raised by the assessee, being general is dismissed. 8. Ground No.2 raised by the assessee is against the order of CIT(Appeals) in not admitting the additional evidence filed before him. Vide ground No.3 the assessee has raised the alternate plea against the issues on merits being confirmed by the CIT(Appeals). 9. The ld. AR for the assessee admitted that there was non- compliance before the AO during the course of assessment proceedings and also no books of account were produced before the AO. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, namely :- (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer] has been allowed a reasonable opportunity-- (a) to examine the evidence or document or to cross- examine the witness produced by the appellant, or (b) to produce any evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, the same cannot be admitted as additional evidence. Under clause (c) to Rule 46A (1), in all such cases where the assessee was prevented by reasonable cause from producing any evidence which is relevant to establish the case of the assessee during the assessment proceedings, then where the assessee establishes his claim of being prevented by sufficient cause, then such additional evidence which is necessary to adjudicate the issues raised vide grounds of appeal before the C IT(Appeals) may be admitted by the C IT(Appeals). The last exception to Rule 46A is where the order appealed against has been passed by the AO without giving sufficient opportunity to the assessee to adduce the evidence relatable to any ground of appeal. 14. Under sub-rule (2) to rule 46A, it is further provided that no evidence shall be admitted under sub-rule (1) by the CIT (Appeals) unless he records reasons in writing for its admission. Under sub-rule 3 to rule 46A, it is further provided that the additional evidence before being admitted, would be confronted to the AO, who in-turn would examine the evidence or documents or cross-examine the witness produced by the appellant. Further, the said su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished and the books of account were not produced. The specific queries raised by the AO in respect of the sundry creditors were not replied to by the assessee despite the AO having show caused assessee and in the absence of books of account, the provisions of section 145(3) of the Act mere applied in order to estimate the income of the assessee on the basis of the gross profit shown by the assessee in the preceding year. Part of the expenses were also disallowed as the assessee had failed to produce the vouchers in respect of the said expenditure. The assessment was completed in the hands of the assessee by making various additions which are being agitated by the assessee vide ground No.3. 16. The case of the assessee before the CIT(Appeals) was that one of the bank accounts under which cash credit limit was raised by the assessee was not reflected in the original balance sheet filed alongwith the return of income implying that the entries of the cash credit limit raised and its application were not reflected in the original balance sheet filed by the assessee. The assessee claims to have prepared a provisional balance sheet incorporating the abovesaid entries which, in turn ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumvent the findings of the AO and also escape the rigours of the additions made in the hands of the assessee. The same cannot be permitted at this stage by way of additional evidence. The assessee has failed to establish its case of reasonable cause in not being in possession of the said documents during the course of assessment proceedings and also the conduct of the assessee during the assessment proceedings of having not complied with various notices and put in appearance before AO does not merit the admission of such evidence at the stage of appellate proceedings. The assessee failed to produce the books of account during the assessment proceedings. The exceptions laid out under sub-rule (1) by way of clause (b) and (c) are thus, not satisfied by the assessee and hence, we find no merit in the application made by the assessee for the admission of the additional evidence. Admittedly, it is not a case where the AO had made the additions without giving sufficient opportunity to the assessee to adduce evidence relevant to any ground of appeal. On the contrary, the AO had time and again issued notices, show cause notices and raised queries to the assessee to explain its stand and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n compared with the copy of account of the assessee in the books of account of the respective parties. The assessee having failed to reconcile the difference except by way of additional evidence, which has not been admitted by us in the paras herein above, the addition made by the AO merits to be upheld in the hands of the assessee. We are in conformity with the order of CIT(Appeals) in this regard and dismiss ground No. 3(a) and 3(b) raised by the assessee. 20. The issue in ground No. 3(c) is against rejection of books of account u/s 145(3) of the Act and application of net profit rate of the earlier year to the receipts declared during the year resulting in addition of Rs.268,412/-. The assessee had failed to produce the books of account before the authorities below and the revised books of account produced by way of additional evidence have been rejected by CIT(Appeals) and upheld by us in paras herein above. Hence, there was no alternative left but to estimate the trading income in the hands of the assessee and application of net profit rate to the sales receipts shown by the assessee. We find merit in the orders of the authorities below in applying gross profit rate shown by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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