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2015 (6) TMI 562 - ITAT LUCKNOW

2015 (6) TMI 562 - ITAT LUCKNOW - TMI - Addition on account of gross profit - books of account rejected u/s 145 on the basis that the closing stock shown by the assessee in balance sheet and the closing stock figure submitted to bank is different and closing stock shown to bank is much higher - held by CIT(A) that the gross profit rate of 8.5% should be worked out on the basis of actual turnover reported by the assessee and credit should be allowed to the assessee of ₹ 1,38,99,075/- being .....

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on of gross profit reported by the assessee at ₹ 1,38,99,075/- from gross profit to be worked out after rejecting the books of account of the assessee.

In the present year, the gross profit shown by the assessee is higher by 1.80% as compared to the preceding year. Even if books are rejected, adopting gross profit rate of 8.5% is excessive considering the facts particularly the gross profit of preceding year and hence, we feel that in the interest of justice, if gross profit rat .....

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ding has been given by him that the assessee has discharged his onus by submitting confirmation letter, PAN, Bank statement and letter from police department. In this manner, we find that the assessee has established all the three ingredients of 68 of the Act i.e. identity and creditworthiness of the creditor and genuineness of the transaction. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and therefore, on this issue, we do not find any reason to interfere in .....

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on is to be allowed. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and therefore, on this aspect, we do not find any infirmity in the order of CIT(A). - Decided in favour of assessee.

Regarding the remaining part of disallowance of depreciation of ₹ 10,28,500/-, we find that the same was confirmed by CIT(A) on the basis that the Learned A.R. of the assessee of the assessee has himself agreed that the purchased plant & machinery has been return .....

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to Shri Mahesh Chandra on various dates in May & June 2008 but the assessee has denied making any payment to Shri Mahesh Chandra. These findings of Assessing Officer could not be controverted by Learned A.R. of the assessee and therefore, on this aspect, we do not find any reason to interfere in the order of CIT(A). - Decided against assessee. - ITA No.520/LKW/2012,ITA No.527/LKW/2012 - Dated:- 5-6-2015 - Shri Sunil Kumar Yadav and Shri A.K. Garodia,JJ. For the Petitioner : Shri P. K. Kapoor, .....

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ction 143(3) and accordingly the entire variation between the "returned income" and the "assessed income" is wholly without jurisdiction. 2. BECAUSE on a due consideration of the material and information already available on record, the "CIT(A)" should have deleted the entire "variation" between the returned income and the assessed income, in exercise of his powers which are coterminous with that of the Assessing Officer and no part of the same could have .....

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hanced Gross profit rate of 8;5% (as against the disclosed G.P. rate of 7.97%) to the disclosed turnover as aforesaid. : ₹ 1,48,20,695 (c) Gross Profit as disclosed by the appellant ₹ 1,38,99,075 (c) Extra profit addition as sustained by the 'CIT(A)' [(b) - (c)] ₹ 9,21,620 4. BECAUSE the books of account had been maintained by the appellant in regular course of business which were subjected to statutory audit under section 227 of the Companies Act and again under sectio .....

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llant were open to verification even independently and even if provisions of section 145(3) are held to be applicable, although disputed by the appellant, no addition on account of extra profit was called for either on facts or in law. 6. BECAUSE in any case the addition of ₹ 9,21,620/- on account of extra profit as sustained by the "CIT(A)" is wholly arbitrary, much too high and excessive. 7. BECAUSE the authorities below have erred in law and on facts in holding that there was .....

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/s. Milk Craft Engineers for an aggregate sum of ₹ 29,38,575/- remained unproved and on that basis in disallowing the appellant's claim for depreciation thereon, amounting to Rs,10,28,500/-. 10. BECAUSE while upholding the disallowance of depreciation claimed by the appellant on purchase of plant & machinery for a value of ₹ 29,38,575/- from M/s. Miik Craft Engineers, the authorities below have failed to appreciate that; (a) purchase of machinery in question stood fully prove .....

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the Assessing Officer giving an opportunity to the appellant to cross examine the said supplier, cannot be made the basis for arriving at a conclusion that plant and machinery in question had not been purchased at all; and accordingly the disallowance of ₹ 10,28,500/- as has been made/sustained by the Authorities below stand wholly vitiated. 11. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice. 3. The grounds raised by the Revenue are as un .....

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addition of ₹ 7,00,000/- made by AO u/s 68 of the Act without properly appreciating the facts that the assessee company did not discharge its onus and grossly failed to prove the creditworthiness of the alleged share applicant. 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting the disallowance of depreciation amounting ₹ 6,77,724/- claimed on old generator, transformer and other assets purchased during the year without properl .....

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3 to 6 are inter-connected in respect of addition made by the Assessing Officer on account of gross profit. In this regard, Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A) in respect of the ground raised by the Revenue. Regarding the dispute raised by the assessee in its appeal for part addition of ₹ 9,21,620/- upheld by CIT(A), it was submitted that the assessment for assessment year 2008-09 was also c .....

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ar 2008-09 and therefore, no addition is justified on this account. 5. We have considered the rival submissions. We find that books of account were rejected by the Assessing Officer u/s 145 of the Act mainly on the basis that the closing stock shown by the assessee in balance sheet and the closing stock figure submitted to bank is different and closing stock shown to bank is much higher. Apart from this, some small discrepancies are also noted by the Assessing Officer and thereafter, he rejected .....

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ofit at ₹ 2,08,67,745/- on the basis of estimated turnover at ₹ 2,455.20 lacs. The CIT(A) has held that the estimation of turnover on the basis of stock statement submitted to the bank is not justified. He has also held that on this issue, the judgment of Hon'ble Madras High Court rendered in the case of CIT vs. N. Swamy [2000] 241 ITR 363 (Mad) supports the case of the assessee. The CIT(A) has also held that even if gross profit is worked out by the Assessing Officer by applying .....

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sidering this judgment of Hon'ble Madras High Court, we find no reason to interfere in the order of CIT(A) on this aspect that only book turnover should be adopted and the same cannot be estimated merely on the basis of stock statement submitted to bank. On second aspect also, we do not find any infirmity in the order of CIT(A) regarding reduction of gross profit reported by the assessee at ₹ 1,38,99,075/- from gross profit to be worked out after rejecting the books of account of the a .....

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rofit before interest and depreciation in the present year comes to ₹ 138.02 lac, which is 7.92% of the turnover. The same in the preceding year was ₹ 42.77lac on a turnover of ₹ 698.64 lac and the rate of such profit was 6.12%. Hence, in the present year, the gross profit shown by the assessee is higher by 1.80% as compared to the preceding year. The basis adopted by Assessing Officer for rejecting the books of account in the present year is mainly for difference in stock stat .....

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screpancies are also noted in the assessment order but the same are not material but still, we feel that even if books are rejected, adopting gross profit rate of 8.5% is excessive considering the facts particularly the gross profit of preceding year and hence, we feel that in the interest of justice, if gross profit rate of 8% is applied, it will serve the interest of justice. We direct the Assessing Officer accordingly. The Assessing Officer should adopt the gross profit rate of 8% on the decl .....

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(A). 8. We have considered the rival submissions. We find that this issue was decided by learned CIT(A) in favour of the assessee by making following observations on pages 8 to 9 of his order, which are reproduced below for the sake of ready reference:- I have considered the arguments and the submissions of the authorized representative along with contents of the assessment order. The A.O. has accepted the confirmation dated 04-11-2009 issued by the Police Department explaining the retirement of .....

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ei.) - 2011, CIT Vs Dwarkadheesh Investments Pvt. Ltd. 2. 2010 TIOL- 236 - H.C.- (Del.) - I.T. - CIT Vs. Kamdhenu Steels & Alloys Ltd. 3. 2012 TIOL- 180- H.C.-Chattisgarh, CIT Vs. Shri Abdul Aziz 4. 201 TIOL - 584 - H.C. - (Del.) - I.T. CIT Vs. Kinetic Finance Limited. 5. 31 DTK 371 - (Alld.) 2012, L.D.K. Shares & Securities Pvt. Ltd. " In all the above cases, additions have been deleted as the assessee has discharged his onus". On consideration of the above discussions and sub .....

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department. In this manner, we find that the assessee has established all the three ingredients of 68 of the Act i.e. identity and creditworthiness of the creditor and genuineness of the transaction. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and therefore, on this issue, we do not find any reason to interfere in the order of CIT(A). Ground No. 2 is rejected. 9. Now we take up ground No. 3 of the Revenue and ground Nos. 9 & 10 of the assessee. These gr .....

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machine also amounting to ₹ 10,28,500/-. 11. We have considered the rival submissions. Regarding the issue raised by Revenue as per ground No. 3 i.e. regarding deletion of disallowance of depreciation to the extent of ₹ 6,77,724/-, we find that a clear finding has been given by CIT(A) that this depreciation is claimed in respect of generator, transformer and fixed assets and plant of the assessee could not have been run and achieved the turnover of ₹ 1,743.61 lacs without using .....

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that the purchased plant & machinery has been returned back to the concerned supplier and therefore, it is clear that the plant & machinery has not been used for business and therefore, depreciation is not allowable. Regarding this argument of Learned A.R. of the assessee that the concerned plant & machinery was returned in the next year after using in present year, we are of the considered opinion that for allowing depreciation, two ingredients are important; one is the ownership o .....

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