Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Deputy Commissioner of Income Tax, Nainital Versus M/s Ganpati Traders, HIMALAYA TRADING CO. and UTTARANCHAL TRADING CO.

2015 (9) TMI 1180 - ITAT DELHI

Addition on account of suppressed sale - CIT(A) deleted the addition holding that books of accounts maintained in computerized environment were accurate and reliable - Held that:- We find that the Assessing Officer had proceeded to estimate this suppressed sales on the ground that the gross profit was negative during the months of October, 2004 to October, 2005 and the Assessing Officer adopted gross profit rate of 6.73%. This approach of the Assessing Officer is totally erroneous and cannot be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s lower than the average profit declared by the assessee, cannot be sole ground to estimate the suppressed sales. The Assessing Officer had also not brought on record any comparable instance to prove that the profit declared by the assessee were wrong. It is trite law that no addition can be made on mere surmises and conjectures. Thus, we do not find any infirmity with the reasoning adopted by the learned CIT(A), nor any evidence was brought on record in rebuttal of the conclusion drawn by the C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ER INTURI RAMA RAO, A.M.: These are the appeals filed by the Revenue directed against different orders of CIT(A) passed on 24.09.2008, 22.09.2008 & 14.10.2008 for the assessment year 2005-06. Since in all the three appeals common grounds are raised except difference in amount, we proceed to decide the appeals by a consolidated order. The grounds of appeal raised in ITA No. 3686/Del/2008 are as under: i. Ld. CIT(A) has erred in law and on facts of the case in deleting the addition of ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

allowing rejecting of books of accounts by the Assessing Officer without examining the primary document like daily sales/stock sheet prepared manually at each shop by the staff which were claimed to have been prepared. iv. Ld. CIT(A) has erred in law and on facts of the case in shifting the onus on the Assessing Officer when there was failure on the part of the assesse in discharging its onus to prove the veracity of figures reflected in books of account with primary documents like one cash vouc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

IT(A) has erred in law and on facts of the case in deciding the case without even examining the assessment record, without considering the documents placed on record by the Assessing Officer in support of her stand taken in the assessment order. 2. For the sake of convenience and brevity, the facts in ITA No. 3686/Del/2008 are stated below:- 2.1 Briefly stated the facts are that the respondent assesses is an AOP with 63 members. It is engaged in the business of purchase and sale of various of br .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t a total income of ₹ 2,36,57,914/-. The disparity between the returned income and the assessed income was on account of addition of alleged suppressed sales. While doing so, the Assessing Officer has rejected the books of account by holding that the respondent assessee failed to furnish the Excise/Manual Register maintained by each shop, huge variation in the gross profit rate, wrong valuation of closing stock, misrepresentation of facts by the Auditor in the Tax Audit Report, Breakage no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Rate of 6.73% is being applied for the months of October 2004 to February 2005. 4.8.2 The following formula is being applied to arrive at the estimated sales during the months of October, 2004 to February, 2005 after applying the average G.P. Rate of 6.73% Total of debit items of Trading A/C except G.P. (-) Closing Stock/(1- 6.73%) Or Total of debit items of Trading A/C except G.P. (-) Closing Stock/93.27%=Estimated sale by applying G.P. Rate of 6.73% Month Estimated Sales by applying G.P. rate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

23591 Total 93634655 80896731 12737924 Being aggrieved by this assessment order, an appeal was filed before the CIT(A), who after considering the entire facts of the case allowed the appeal vide para 5.3 of his order, which reads as under: 5.3 I have considered the above submissions of the counsel of the appellant and the facts stated in the assessment order by the AO. It is observed that primary reasons given by the AO for rejection of the books of account and consequential addition of suppress .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plete record of stock and sales made during the day by the appellant. The sale statements are then sent to the Chief Accountant periodically who maintains the books of accounts and stock registers on the computerized environment. Such registers' maintained by the appellant have been produced before the AO. Even, daily sales statements for various shops were furnished. The appellant deals in various brands of liquor which are sold at various rates at different shops. As per the policy of Exci .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to day basis and under no circumstances, there can be fixed rate of such G.P. because of varying gross margins of different brands and the appellant's policy to sell the goods even at loss in order to clear its stock. The factors explained for selling goods at low rates and even at loss have been accepted by the AO which means that there is sufficient reason for negative G.P. at some months. It must be appreciated that such negative G.P. shall not be as a result of a single transaction of s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stock anyhow by the close of the year. Merely because the appellant has sold the goods at a loss and such sales are duly reflected in the books of account and other Excise registers, the AO cannot brush aside such book results supported by relevant evidence. The AO cannot step into the shoes of a businessman and try to dictate as to how the business is to be carried out. It is the prerogative of a businessman to decide about the selling rate vis-a-vis business exigencies of the situation. 5.5 Re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h no mistake at all has been pointed out towards the maintenance of such registers. 5.6 Regarding the valuation of closing stock Hon'ble CIT, Haldwani in proceeding u/s 263 of I.T. Act before him in the case of the appellant for AY 2004-05 has passed a speaking order citing valid reasons as to why the license fees and adhibaar will not form part of the closing stock of the appellant. I have looked into such order and the reasons for non inclusion of such license fees and adhibaar towards the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fee cannot form part of the closing stock. Even if the appellant does not make purchases, license fees and adhibaar have to be paid which pertain to a definite period and accordingly have to be written off in the books of account for the said year. The AO has also contended that the appellant has not produced cash vouchers. The appellant has admitted that cash vouchers have not been issued to the customers in case of liquor sale at shops and also in bar and restaurants it is not customary to iss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

'C' Bench in ITA No. 2543IDel/05 for the Block period: 20QI-02, wherein-if has been held -that when the appellant had given complete details of sales, sale rates, reasons of decline and had also disclosed profit which could be treated to be low, there was no justification on the part of the AO to reject the books of account. Further the Tribunal has concurred with the order of the CIT(A) wherein it has been observed, "the AO has not been able to bring on record even one instance to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

et or it is a buyer's market. The assessment must not be based on mere suspicion or pure guess but on legitimate materials from which a reasonable inference of having earned income during the accounting year can be drawn. 5.7 Keeping in view the above ruling given by the Hori'ble ITAT and the Id. CIT(A)'s finding, the trading results as declared by the appellant cannot be brushed aside merely because of the reason that the gross profit rate has varied in certain months and the day to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ained complete sale summary in the shape of daily sales statement which are also verifiable from the stock registers, I find no reason-to-take the adverse view against the appellant about the actual sales effected-as per such registers. 5.8 Regarding the contention of the AO that the breakage has not been shown by the appellant, it has been submitted by the appellant that any breakage has to be compensated by the concerned staff and it is the duty to provide a new bottle in place of the broken b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s responsible for breakage, it cannot be made a basis for rejection of the books of account. To sum up, the Aa has alleged that the appellant has effected suppressed sales during certain months, to be specific from Oct, 2004 to Feb, 2005 because during these months the G.P. rates fluctuated vigorously yielding negative rates of such G.P. But the AO has not been able to prove on record any single instance or evidence to establish that the appellant has actually made sales out of books or sold goo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evidence. The entire addition appears to have been made on surmises and presumption which carried no weight. Therefore, I have no other option but to delete such addition and the AO is hereby directed to allow consequential relief to the appellant. Hence ground Nos. (i) to (viii) are allowed. Being aggrieved by this order, the Revenue is before us with the present appeals. 3. The ld. Senior DR vehemently argued that the CIT(A) was not justified in holding that the books of account cannot be rej .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version