TMI Blog2014 (12) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of accounts u/s. 145, CIT(A) erred in deleting the addition and the addition was correctly made by the AO – the Tribunal reversed the CIT(A)’s order without assigning any cogent reasons – thus, the order of the Tribunal is set aside and the matter is remitted back to the Tribunal – Decided in favour of assessee. - Tax Appeal No.122 of 2001 - - - Dated:- 1-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELLANT : MR SN DIVATIA, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE JUDGEMENT Per: K S Jhaveri: 1. By way of this appeal, the appellant has challenged the judgment and order dated 27.9.2000 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' in ITA No. 856/Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase, sales and G.P. in respect of selective purchases i.e. purchases from party sold and G.P. Earned is below 10%. The sale at lower G.P. is almost half of total sales. He also filed month-wise sales and purchases. There is some force in the submission of the assessee. However, it does not justify a big fall in the gross profit. The defects noticed in the past do exist. Monthwise sales and purchases in terms of quantity not furnished. Day-to-day stock register is not maintained. The assessee has not maintained day-today stock register item wise and size wise. However, the assessee has prepared a statement of quantity of goods. In this statement, certain defects are noticed as under: Item Sale Rate Purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 8,41,296 The addition is ₹ 8,41,296/-. The assessee has furnished inaccurate particulars of income, hence, penalty proceedings u/s. 271(1)(c) of the Act are initiated. 4. The learned advocate Mr. Divatia has further contended that in paras-4 5, the CIT(A) has observed as under: 4. The learned CA Shri C.F.Patel strongly objected to the entire approach of the Assessing Officer. He submitted that the purchases and sales were fully vouched and quantity details were maintained. The GP of 10.22% on the sales of ₹ 49,51,455/- of AY 1989-90, he maintained was of 17 months. Now if the same has been annualised, then the GP increase would be of about 3.42 times more and when sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems A,B C and the first item at A was of closing stock under which in the said schedule it was clearly mentioned that it was taken at cost. Further he drew my attention to schedule 12 under the heading of notes on accounts. These notes consisted of 12 different items, the fourth of which was under the title of stock. The stock pointed out earlier consisted of two groups viz. Opening stock (A) and closing stock (B). Again the closing stock was composed of six different items the last (F) of which was of imported timber which tallied with reference to both the quantity as well as value as declared by the appellant which as used against it by the Assessing Officer. From both these schedules 05 and 12 respectively, he conclusively attempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself held that it would not be acceptable (as reasonable) was arrived at if and when the actual sales of imported timber done by the appellant during the entire previous year was multiplied with the figure of value of closing stock as per unit. However, as schedules 05 and 12 have proved that this was the cost of closing stock and the same cannot be made applicable to the actual sales because firstly, it would bring to an unreal situation wherein the appellant would have charged to tax with reference to an income upon which it could have earned a profit but in fact it did not earn it. As per the following observations of the Supreme Court in 67 ITR 17 - CIT, Guj. v. A. Raman Co., it is not permissible:- But the law does not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Having heard both the sides, we have carefully gone through the orders of authorities below as well as the written submissions filed by both the sides. Considering the entirety of the facts and circumstances of the case, we are of the opinion that Assessing Officer is legally and factually correct in rejecting the books of accounts u/s. 145 of the IT Act, 1965. Admittedly, the burden is on the assessee to prove that timber imported through a specific bill and quantity is either shown as sold or lying in the closing stock. Before the Assessing officer assessee has not furnished monthwise sales and purchases in quantity. From the details furnished before us, learned department representative has also found various defect as enumerated i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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