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2015 (6) TMI 420 - ITAT JAIPUR

2015 (6) TMI 420 - ITAT JAIPUR - TMI - Trading addition - CIT(Appeals) confirming the action of the Assessing Officer in applying a GP rate of 56.17% in export division - Held that:- The estimation made by the Assessing Officer appears to be on the higher side in spite of the fact that the ld CIT(A) has accepted the explanation may be to some extent which is not defined. In the facts and circumstances of the present case, no addition is called for when the explanation of fall in G.P. appears to .....

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ete the addition confirmed by the ld CIT(A). - Decided against assessee.

Disallowance of commission - Held that:- In past, similar additions were made by the Assessing Officer, which has been either deleted by the CIT(A) or confirmed by the CIT(A) but finally the Coordinate Bench had confirmed a lump sum addition of ₹ 50,000/- in each year. The ld CIT(A) has specified the defects with reference to bills and not deduction TDS on commission payment but he is not allowed the assess .....

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ion. Therefore, there may be defects in the receipts of commission payment but it is a part and parcel of the business dealings. Therefore, we confirm the disallowance under this head at ₹ 1 lac out of total disallowance made by the Assessing Officer at ₹ 16,54,883/- Decided partly in favour of assessee.

Disallowance of employee’s contribution towards PF - the assessee paid PF on 21/5/2007 and 28/09/2007 whereas the due date was on 15/5/2007 and 15/09/2007, accordingly AO .....

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of May and September, 2007 in accounting year itself, therefore, we delete the addition made by the Assessing Officer and confirmed by the ld CIT(A). Decided in favour of assessee. - ITA No. 392/JP/2012 - Dated:- 15-5-2015 - Shri R.P. Tolani and Shri T.R. Meena,JJ. For the Petitioner: Shri Madhukar Garg (CA) For the Respondent: Smt. Neena Jeph (JCIT) ORDER PER: T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 19/03/2012 passed by the learned CIT(A)-II, Jaipur f .....

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17,06,982/-. The action of the learned CIT(Appeals) in sustaining the trading addition is unjustified and excessive. 3. That the learned CIT(Appeals) has erred in holding that the appellant had stated that none of the commission recipients had come back to his emporium. The said finding is illegal and unjustified. 4. That the learned CIT(Appeals) has erred in holding that there is change in the facts and circumstances in the current year as compared to earlier years. The said finding is illegal .....

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mstances of the case the learned CIT(Appeals) has erred in sustaining a disallowance of ₹ 75,424/- out of entertainment expenses. The disallowance sustained is unjustified and excessive. 8. That the learned CIT(Appeals) has erred in sustaining disallowance of ₹ 24,600/- on account of employee s contribution towards PF. The disallowance sustained is unjustified and excessive. 2. The 1st and 2nd grounds of the assessee s appeal is against applying the G.P. rate 56.17% in export divisio .....

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tyle of M/s Rajasthan Small Scale Cottage Industries (Export). The assessee also produced the books of account such as cash book, ledger etc. The Assessing Officer has examined the GP result for the year under consideration and found that the assessee admittedly continued not to maintain day to day stock register or quantitative and qualitative details in respect of purchase and sale, consumption of raw material. Therefore, verification of trading results is not possible. The assessee had also m .....

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being heard on trading results, which was replied by the assessee vide letter dated 06/10/2010. After examining the submission of the assessee, he found these submissions in general in nature. The assessee had shown sale of ₹ 11.37 crores and purchase of ₹ 7.84 crores besides closing stock ₹ 4.71 crores in local sales. Likewise in export unit, the assessee had shown the sale of ₹ 2.85 crores, purchase of ₹ 1.4 crores, showing closing stock of ₹ 013 crore. On .....

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he G.P. rate shown in the preceding years. In preceding year also, the same defects were noticed by the Assessing Officer and books of account were rejected and trading additions were made by him. Accordingly he rejected the book result U/s 145(3) of the Act on the basis of defects pointed out by the Assessing Officer in preceding para. He also relied upon the decision of the Hon'ble Supreme Court in the case of S.N. Namaswery Chettiyar Vs. CIT (1960) ITR 579 for maintenance of stock registe .....

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tion has been explained by the assessee. Likewise G.P. rate on local sale is applied @ 36% as against the declared G.P. rate of 34.53%. Accordingly, he made trading addition of ₹ 20,30,516/- in export sale and ₹ 17,06,982/- in local sale. 3. Being aggrieved by the order of the learned Assessing Officer, the assessee carried the matter before the learned CIT(A), who had confirmed the addition by observing as under:- 3.1 It is seen that the appellant has not made any specific arguments .....

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9-10 dated 16/06/2010. The various discrepancies pointed out by the A.O. are enumerated as under: a) The appellant had not maintained any stock register therefore details of opening stock and closing stock were not verifiable. b) The appellant had not maintained any quantitative and qualitative details for various items purchased and sold. In fact, the appellant had given only the value of various items in the closing stock such as carpets, textiles, readymade garments. Neither the quantity not .....

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thekkattu Constructions (269 ITR 346). He further held that there is no cogent evidence or reasons advanced by the assessee whereas the Assessing Officer s estimation is supported by the material fact of assessee s own case of A.Y. 2004-05. The Assessing Officer had applied G.P. rate of 56.17% shown by the appellant in its export division in A.Y. 2004-05. Similarly, the Assessing Officer had applied G.P. rate of 36% in the local unit which is quite fair and reasonable. The same is upheld by foll .....

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rt unit at 49.06% as against G.P. rate of 49.07% and 49.1% in assessment year 2007-08 and 2006-07 respectively. The ld Assessing Officer applied G.P. rate in A.Y. 2005-06 @ 56.17%, which was confirmed by the ld CIT(A) @ 52% as reasonable in export unit. The assessee had preferred further appeal before the Hon ble ITAT Jaipur Bench, Jaipur vide ITA No. 21/JP/2009 for A.Y. 2005-06. It had been decided vide order dated 23/10/2009 and had deleted the entire addition and GP rate of 47.5% declared by .....

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ing the G.P. rate of 56.17% in export unit. 4.1 Similarly the Assessing Officer made the addition in G.P. rate in local unit from A.Y. 2005-06 to 2007-08, which was deleted by the ld CIT(A) and the ld CIT(A) s order was upheld by the Hon ble ITAT. The department further filed appeal before the Hon ble Rajasthan High Court but no question of law had been admitted by the Hon ble High court. This issue has become final, therefore, addition made by the Assessing Officer may please be deleted. 5. The .....

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h confirmed the rejection of books but it further observed that as regards the estimation of income in local unit, in absence of any comparable case and past history in the assessee s own case is the best guide in the present case. The assessee had declared better result as compared to preceding two years as mentioned by the ld CIT(A) and is a matter of record. Therefore, in view of the decision of Hon ble Jurisdictional High Court s decision in the case of CIT vs. Gotan Lime Khanij Udyog 256 IT .....

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y vouched. The reason for fall in G.P. was explained because the export of gold jewellery was made for the first time by the assessee during the impugned year. The ld CIT(A) has accepted the contention of the assessee to some extent. The explanation given appears to be satisfactory. The estimation made by the Assessing Officer appears to be on the higher side in spite of the fact that the ld CIT(A) has accepted the explanation may be to some extent which is not defined. In the facts and circumst .....

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re, by respectfully following the decision of the Coordinate Bench, we delete the addition confirmed by the ld CIT(A). Accordingly, both the grounds of assessee s appeal are allowed. 7. Grounds No. 3 to 6 of the assessee s appear are against confirming the disallowance of ₹ 16,54,883/- out of commission paid by the assessee. The ld Assessing Officer observed that during the year under consideration, the assessee had claimed commission payment on local sale at ₹ 1,80,92,369/- and S .....

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as per the past history of the case of the assessee from A.Y. 2003-04 to 2006- 07. The assessee submitted justification of payment of commission before the Assessing Officer. It was further argued before the Assessing Officer that the assessee had preferred appeal before the higher appellate forum and matter has been decided by the Hon ble ITAT and meager amount of ₹ 50,000/- had been confirmed in all the each year by it. It is further submitted that Emporiums are situated at nearby place .....

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r, sale amount, commission paid, date of payment of commission and the signature of the recipients. The AR for the assessee relied the decision before the Assessing Officer passed by the Hon ble Gujarat High Court in the case of Dr. G.G. Joshi Vs. CIT reported in 209 ITR 324 wherein it has been held that the assessee is to establish the following three conditions. i) Establish the practice prevailing in that line of business for making such payment. ii) To adduce satisfactory evidence to establi .....

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hat it were printed receipts showing the sale voucher number, amount of bill, name of persons to whom commission given alongwith signature of the recipient. The assessee had not submitted address of the recipient nor the identity of person from these vouchers. The contention of the assessee that the commission had been paid to various drivers and guides of the vehicles is very general statement. The details were prepared by the staff of the assessee, which are not verifiable. Thus, he disallowed .....

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ularly paid commission for bringing customer to its premises. It was submitted by the assessee before the ld CIT(A) that it is not possible to produce commission recipients for A.Y. 2008-09 because it is not necessary that the same person would come again. He held that in absence of required details, the commission expenses were not amenable to verification. He further verified the voucher dated 03/4/2007, which showed that the commission of ₹ 31,466/- was payable to Shri Jitu, however, he .....

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cheque. It was hard to believe that the appellant did not have complete address of Shri Shravan. The voucher numbers 4 to 8 dated 05/4/2007 showed identical amount of commission of ₹ 57,624/- each to Shri Shravan, Shri Suresh, Shri Anish and Shri Pramod on sales of ₹ 11,52,480/- to Shri Dayal.T.Meshri, 1110, W Keystone, Avecatoosa, USA. It was hard to believe that the same customer was brought to the emporium of the appellant through four different taxis i.e. RJ-14-0761, RJ-14-4255, .....

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cash. Since the amount paid in cash exceeded ₹ 20,000/-, disallowance U/s 40(A)(3) was liable to be made. However, the counsel of appellant had produced vouchers for the few months only. Therefore, it was difficult to ascertain the disallowance U/s 40(A)(3).The voucher dated 29/04/2007 showed that commission of ₹ 20,530/- was paid to Shri Dilawar in respect of sales made to Haleleine Reeve of Australia and Virgilio Mazzardo of Italy. It was hard to believe that same taxi driver had b .....

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re, it was difficult to ascertain the disallowance U/s 40(A)(3) The vouchers dated 05/4/2007 and 23/06/2007 showed that commission of ₹ 57,624/- and ₹ 33,860/- was paid to Shri Pramod. However, the alleged vouchers showed different taxi numbers and different signatures. The voucher dated 26/06/2007 showed that commission of ₹ 23.120/- was paid to Shri Jivan in cash, voucher dated 27/07/2007 showed that commission of ₹ 27,050/- was paid to Shri Dinesh in cash and voucher d .....

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0/- in cash on 04/8/2011. The balance amount of ₹ 39,110/- was paid to him through cheque. It was totally against the human probability that any taxi driver would leave any amount of commission in the hands of the payer. The appellant has also contradicted his stand that none of the commission recipients had come back to his emporium. It is seen that one guide Shri Mitesh Taluka was p[aid commission of ₹ 67,650/- on 6 days between the period 15/3/2008 to 25/3/2008. It was highly impr .....

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r hand, in the ledger account, the appellant had debited commission of ₹ 49,406/- on 01/04/2007 which is split into 13 journal entries each below ₹ 2500/- and 1 journal entry of ₹ 17,364/-. However, before him only one voucher bearing No. 1 in the name of Shri Aizaz has been filed. Similarly the appellant has debited commission of ₹ 40,453/- on 02/4/2007 in the ledger account, which is split into 11 journal entries each below ₹ 2500/- and 1 journal entry of ₹ .....

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genuine. He further relied on the decision of Hon ble Punjab & Haryana High Court in the case of Mittal Belting and Machinery Stores Vs. CIT 253 ITR 341, decision of Hon ble Delhi High Court in the case of Schneider Electric India Ltd. 304 ITR 360, Hon'ble Supreme Court s decision in the case of CIT Vs. Premier Breweries Ltd. 279 ITR 51, Onam Agarbathis Co Vs. DCIT 310 ITR 56 and CIT Vs. McDowell Co Ltd. 291 ITR 107. Accordingly it was held that the assessee was not entitled to deduct co .....

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notice and not called any explanation from the assessee with regard to discrepancies mentioned by him in the appellate order, which is violation of principle of natural justice. He further not allowed the assessee to explain all defects pointed out, non deduction of TDS on commission. The ld Assessing Officer had not pointed out any defect and no disallowance has been made by the Assessing Officer in assessment order. In past also similar additions were made by the Assessing Officer @ 8% but th .....

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urt decision in the case of CIT Vs. Goel Builders 331 ITR 344, Hon'ble Calcutta High Court decision in the Mukti Properties (P) Ltd. Vs. CIT 344 ITR 177. He also cited various decisions on consistency. 10. At the outset, the ld DR vehemently supported the order of the ld CIT(A). 11. We have heard the rival contentions of both the parties and perused the material available on the record. In past, similar additions were made by the Assessing Officer, which has been either deleted by the CIT(A) .....

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s, auto drivers. They come from outside and had dealing occasionally and it was not fair to pay commission in front of customers. It is just like a secret commission and a very short duration is available with the assessee to complete the formalities for paying commission. Therefore, there may be defects in the receipts of commission payment but it is a part and parcel of the business dealings. Therefore, we confirm the disallowance under this head at ₹ 1 lac out of total disallowance made .....

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