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2015 (5) TMI 402 - ITAT AHMEDABAD

2015 (5) TMI 402 - ITAT AHMEDABAD - TMI - Rejection of books of accounts by AO - Held that:- Assessing Officer was right in rejecting books u/s. 145(3) since assessee has not maintained any stock register/production register and books of accounts were incomplete. There was discrepancy in figure of sale/purchases furnished by assessee at the time of survey and furnished during course of assessment proceeding. Assessing Officer has pointed out the defects in maintenance of books of accounts. The a .....

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een done in this case. In view of discrepancy pointed out by Assessing Officer, books of account of assessee were not reliable. He has rightly rejected the books of account u/s. 145(3). This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. - Decided against assessee.

Addition for the alleged low G.P. - Held that:- AO has computed gross profit rate of various items dealt with by assessee on the basis of records of assessee, norms of industry and state .....

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facts and circumstances, CIT(A) was justified in upholding the rejection of books of accounts as discussed above and having done so, CIT(A) was justified in sustaining addition of ₹ 19,63,297/- made on account of low gross profit rate - Decided against assessee.

Addition on account of sales of cattle feed - CIT(A) deleted the addition - Held that:- As regards the addition of ₹ 21,150/- and ₹ 1,23,021/-, CIT(A) observed that these sales have been recorded in books of .....

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ot justified in making addition assessee’s hands. Accordingly, addition of ₹ 5,93,853/- was rightly deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. - Decided against revenue.

Unaccounted purchase of Kapas Shanker - CIT(A) deleted the addition - Held that:- Assessing Officer has chosen not to accept purchase account in which quantity record have been made. It was also stated on behalf of assessee that all purchases so recorded were .....

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is factual finding of CIT(A) needs no interference from our side. - Decided against revenue.

Unaccounted purchase of Shankar Kapasiya (cotton seeds) - CIT(A) deleted the addition - Held that:- CIT(A) observed that purchases recorded in X-13 pertain to assessee firm and associate concern M/s Raghuvir Cotton Co. The associate concern has filed return of income independently showing these transactions. Return of same has been accepted. Assessing Officer has not mentioned anything in the .....

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ecided against revenue.

Unaccounted purchase of Kalyan Kapas - CIT(A) deleted the addition - Held that:- CIT(A) having considered arguments of assessee and observations of Assessing Officer and remand report of Assessing Officer observed that Assessing Officer has made this addition on the basis of figures given by assessee during survey while he has made gross profit addition on the basis of sale figures given by assessee at the time of assessment proceedings. In this background, Ass .....

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ale. CIT(A) having considered the argument of assessee and observation of Assessing Officer found that sale of cotton bales is out of accounted stock and at best profit can be added and not entire sale. Accordingly, Assessing Officer is directed to compute profit on sale of cotton bales and make addition of profit on sale of cotton bales and not entire sale. This reasoned factual finding of CIT(A) needs no interference from our side - Decided against revenue.

Unaccounted sale of kala .....

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associate concern for which return has been filed. Assessing Officer has not pointed out anything adverse in the remand report filed by Assessing Officer. In this background, CIT(A) rightly observed that addition made by Assessing Officer by clubbing the income of M/s. Raghuvir Cotton Co. was not justified and same was rightly directed to be deleted - Decided against revenue.

Unexplained stock difference - CIT(A) deleted the addition - Held that:- CIT(A) having considered the observa .....

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ound that entire procedure has not been followed and only certificate issued by the District Industry Centre was filed and certificate issued by sales tax authority was not furnished. Stand of assessee has been that this certificate was never called for by Assessing Officer and has enclosed the certificate issued by sales tax authority during appellate proceedings. CIT(A) having considered the same observed that Assessing Officer has made addition of this amount on the ground that assessee did n .....

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deleted by CIT(A). - Decided against revenue.

Unexplained cash credits - Held that:- CIT(A) observed that assessee has failed to file confirmations and also failed to produce the creditors to establish the genuineness of cash credits. Accordingly, addition made by Assessing Officer of ₹ 4, 61,445/- as unexplained cash credit was rightly confirmed by CIT(A), which needs no interference from our side. - Decided against assessee. - ITA. No. 2144/Ahd/2007, ITA. No. 2172/Ahd/2007 - .....

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s: 1. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 5,93,853/- on account of sales of cattle feed. 2. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 1,23,987/-on account of unaccounted purchase of Kapas Shankar (Cotton 'Shankar'). 3. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting .....

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profit thereon and not the entire sale itself i.e. ₹ 27,71,015/-. 6. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 8,10,665/- on account of unaccounted sale of Kala by clubbing the income of Raghuvir Cotton Company. 7. The Ld. Commissioner of Income tax (A) - XVI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 11,16,568/-on account of unexplained stock difference of cotton and .....

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- XVI, Ahmedabad may be set aside and that of the Assessing Officer be restored. 2.1 In ITA No. 2172/Ahd/2007, assessee has filed the appeal on the following grounds: 1. The learned Commissioner of Income Tax (A) has erred in confirming the rejection of book results u/s.145(3) of the I.T. Act, 1961. 2. The learned Commissioner of Income Tax (A) has erred in confirming an addition of ₹ 19,63,297/- made by Assessing Officer for the alleged low G.P. 3. The learned Commissioner of Income Tax ( .....

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₹ 99,858/- 3. Dhirubhai Ambaram Rs.1,00,000/- 4. Laghrabhai Ratubhai Rs.1,00,000/- 5. l.alubhai. Gajubhai ₹ 50,000/- Rs.4,61,445/- 3. Assessee is engaged in the business of kapas. Facts in this issue are that return declaring NIL was filed on 30.10.2002. A survey u/s. 133A was carried out in this case on 30.01.2002. During survey books of account and documents were impounded. Statement of Shri Thakarshibhai Thakkar main partner of assessee firm was recorded. The main partner has admi .....

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, sales and closing stock which was the primary data. Assessee submitted these details which differ from details submitted during assessment proceedings for the same period. Assessing Officer found that there was difference in purchases, sales and closing stock. He concluded that primary data and other documents have been prepared artificially. He rejected book results of assessee on the grounds that sales and purchases were not reflected correctly in primary books of account, production registe .....

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er stated that 100 kgs of Kala yields 70 kg of Kapas and 70 kgs of Kapas yields 28 kgs of cotton and 42 kgs of cotton seeds. On the basis of these calculations Assessing Officer has worked out gross profit rate of Kala Kapas at 7.36%, Kalyan Kapas 24.6%, Oil & cattle feed at 62.71%. On purchase, sale and closing stock figures of various items furnished by assessee during assessment proceedings Assessing officer computed gross profit at ₹ 37,24,780/-. Assessee has shown gross profit of .....

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nd physical stock was not taken at the end or year. Transactions were not entered in books of accounts for months. Cash book did not reflect opening and closing balances. There was discrepancy with regard to sales/purchases and closing stock between figures given by assessee during course of survey proceedings and details submitted during assessment proceedings. In this regard, the main stand of assessee has been that Assessing Officer has not pointed out any specific defects in books of account .....

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ster/production register and books of accounts were incomplete. There was discrepancy in figure of sale/purchases furnished by assessee at the time of survey and furnished during course of assessment proceeding. Assessing Officer has pointed out the defects in maintenance of books of accounts. The argument of assessee that books of accounts could not be completed since it was middle of the season has no force. Assessee has maintained inward/outward register, souda books and bill books. There was .....

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finding of CIT(A) needs no interference from our side. We uphold the same. 3.3 Regarding addition of ₹ 19,63,297/- made by Assessing Officer on account of low gross profit rate, we find that Assessing Officer has computed gross profit rate of various items dealt with by assessee on the basis of records of assessee, norms of industry and statement of main partner of assessee firm. Assessing Officer then applied gross profit rate so computed on sale of various items to compute gross profit r .....

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T(A) was justified in sustaining addition of ₹ 19,63,297/- made on account of low gross profit rate. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 4. Various other additions made by Assessing Officer are being dealt as under: 4.1 First issue as raised in Revenue s appeal is with regards to addition of ₹ 5,93,832/- on account of unaccounted sale of cattle feed. Assessing Officer has made addition of ₹ 21,150/- on account of bogus sale o .....

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edings and Assessing Officer has already taken into account sales disclosed by assessee during assessment proceeding for making gross profit addition. Therefore, addition on account of these sale should not be made. As regards addition of ₹ 4,49,682/-, CIT(A) observed that these sales pertained to M/s. Raghuvir Cotton Co. and have been included in turnover of said concern. Since said concern has filed separate return of income Assessing Officer was not justified in making addition assessee .....

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otton produced from kapas and estimated unaccounted sale of cotton of ₹ 1,23,987/-. Stand of assessee has been that copy of purchase account was furnished during course of survey as per which total quantity purchased was 53833 kg and there was a difference of only 4 kg which was negligible. Assessing Officer has chosen not to accept purchase account in which quantity record have been made. It was also stated on behalf of assessee that all purchases so recorded were duly supported by purcha .....

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T(A) needs no interference from our side. We uphold the same. 4.3 Next issue as raised in Revenue s appeal is with regards to addition of ₹ 71,89,691/- under the head Shanker Kapasiya i.e. cotton seeds. Assessing Officer has mentioned that as per pages 1 to 5 of X-13, assessee purchased 518120 kgs of shanker kapasiya during period 5.12.2001 to 28.01.2001. Out of these only 142534 kgs was accounted for in the books. Assessing Officer did not accept contention of assessee that other concern .....

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X-13 belong to two firms and these purchases were duly recorded in their books of accounts. Assessee firm purchased 4,30,297 Kg. and M/s Raghuvir Cotton Co. have purchased 87,815 Kgs of cotton seeds. It was further stated that all these explanations were furnished during course of assessment proceeding. Assessing Officer has not accepted the purchases made by M/s. Raghuvir Cotton Co. whereas payments in respect of purchases made by that concern have been made by normal banking channel and payme .....

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parate addition which is not justified. Further stand of assessee has been that dates, vehicles nos. and quantity of goods purchased mentioned in both items were in agreement. All these documents were in custody of Assessing Officer and could be verified. Considering the arguments of assessee, observation of Assessing Officer and remand report of Assessing Officer, CIT(A) observed that purchases recorded in X-13 pertain to assessee firm and associate concern M/s Raghuvir Cotton Co. The associate .....

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he peak amount can be made. In view of this, CIT(A) deleted addition of ₹ 71,89,691/-. This factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.4 Next issue as raised in Revenue s appeal is with regards to addition of ₹ 1,65,231/- as unaccounted purchase of Kalyan Kapas. Under the head Kalyan Kapas, Assessing Officer has made addition of ₹ 1,65,231/- on account of unaccounted purchase of 4950 kgs Kalyan Kapas. Assessing Officer has mentioned tha .....

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of survey and impounded books. Whatever quantity is mentioned in Annexure X-13 is duly recorded in the books of account. These are also entered in impounded records. Assessing Officer has chosen to ignore the impounded records. Accordingly, requested to delete the addition. CIT(A) having considered arguments of assessee and observations of Assessing Officer and remand report of Assessing Officer observed that Assessing Officer has made this addition on the basis of figures given by assessee duri .....

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icer has mentioned that opening stock of cotton and cotton bales is 51460 kgs and 55300 kgs respectively. Total production was 170975 kgs. The sale of cotton was 152825 kgs and therefore closing stock should be 124910 kgs. The physical stock available was 43000 kgs. Assessing Officer treated the difference of 81910 kgs as unaccounted sales and made addition of ₹ 27,71,015/- which was total sale consideration. 4.5.1 In appeal, counsel for assessee submitted that Assessing Officer has made a .....

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ssee has been that Assessing Officer can add the profit element on sale of such goods since sales were accounted. The amount of sale difference cannot represent the income of assessee, who has disclosed the sale. CIT(A) having considered the argument of assessee and observation of Assessing Officer found that sale of cotton bales is out of accounted stock and at best profit can be added and not entire sale. Accordingly, Assessing Officer is directed to compute profit on sale of cotton bales and .....

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hase of kala has been made by assessee firm and not by Raghuvir Cotton as stated by assessee. Assessing Officer therefore held that income of Raghuvir Cotton is to be considered for clubbing with income of assessee. As against purchase of 3,13,315 kgs of kala purchase of 75,520 kgs was entered in ledger. Assessing Officer has further mentioned that opening stock of kala was 2,59,400 kgs and hence 5,72,715 kgs of kala was available for production of kapas. As per norms given by assessee Assessing .....

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ses pertained to M/s Raghubir Cotton Company. Assessing Officer worked out the profit on sale of cotton and cotton seed at ₹ 8,10,665 and made addition of the same. 4.6.1 Matter was carried before First Appellate Authority, wherein stand of assessee has been that Assessing Officer has relied on X-13 which has been impounded from premises of assessee and contains transactions carried out by assessee firm. It was stated on behalf of assessee that it was explained to Assessing Officer that ap .....

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n the books of account of M/s. Raghuvir Cotton Co. they did not pertain to assessee firm and question of making addition could not arise. CIT(A) having considered arguments observed that Assessing Officer has not accepted the contention of assessee on the ground that impounded book X-13 belongs to assessee and transactions recorded pertained to assessee alone. Assessee on other hand has mentioned during survey itself that it is not dealing in Kala and the associate concern M/s. Raghuvir Cotton w .....

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nue s appeal is with regards to addition of ₹ 11,16,568/- on account of unexplained stock difference. Assessing Officer has mentioned that there was difference in stock of cotton of 1,27,971 kgs and of cotton seeds of 79,703 kgs. Assessing Officer treated the difference of stock as unexplained investment of the assesses and made addition of ₹ 11,16,568/- by working of the profit on sales of these items. In appeal, stand of assessee has been that addition has been made by relying on q .....

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y, same was deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. 4.8 Next issue as raised in Revenue s appeal is with regards to addition of ₹ 3,47,181 /- on account of disallowance of unpaid sales tax u/s. 43B of the Income Tax Act. Assessing Officer has mentioned that sales tax amounting to ₹ 3, 47,181/- has remained unpaid. Before Assessing Officer, assessee stated that it was exempt from sales tax and filed a copy of .....

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cer has also quoted CBDT circular No.674 dated 29.12.1993 as per which the amount of sales tax liability converted into loan is to be allowed as a deduction in which conversion has been permitted by said Governemnt. Since assessee failed to furnish any evidence in this regard Assessing Officer treated the unpaid sales lax as income of assessee. 4.8.1 In appeal, CIT(A) granted relief to assessee. Same has been opposed on behalf of Revenue. Before us, learned Departmental Representative supported .....

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not furnished. Stand of assessee has been that this certificate was never called for by Assessing Officer and has enclosed the certificate issued by sales tax authority during appellate proceedings. CIT(A) having considered the same observed that Assessing Officer has made addition of this amount on the ground that assessee did not produce required certificate in Form D issued by sales tax Authority. The certificate has been produced by assessee during appellate proceedings since it was not cal .....

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