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Assistant Commissioner of Income Tax, Circle-5, Jaipur Versus M/s Sambhav Gems Ltd

2015 (12) TMI 136 - ITAT JAIPUR

Trading addition - CIT(A) deleted the addition - Held that:- We have verified the facts, which are identical to A.y. 2008-09. The similar trading additions were made by the Assessing Officer by rejecting the books of account, not maintaining quantitative and qualitative details of stock and day to day stock register of raw material consumed. During the year, the assessee’s turnover has gone up whereas the G.P. rate has gone down compared to immediate preceding year but is more compared to A.Y. 2 .....

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. Bhateja (Addl.CIT) For The Assessee : Shri G.G. Mundra (CA) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the revenue against the order dated 02/09/2013 of the learned C.I.T.(A)-II, Jaipur for A.Y. 2010-11. The sole ground of appeal is reproduced as under:- (i) Deleting trading addition of ₹ 54,98,268/- made by A.O., without appreciating that neither quantitative and qualitative details of stock were maintained nor day to day stock register of raw material consumed was kept by as .....

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he Assessing Officer. The ld Assessing Officer observed that the assessee had shown following business results from A.Y. 2007-08 to A.Y. 2010-11, which is as under:- A.Y. Sales Rs. G.P. Rs. G.P. Rate 2007-08 3218.71 lacs 379.00 lacs 11.77% 2008-09 2740.98 lacs 404.00 lacs 14.74% 2009-10 1845.30 LACS 355.28 lacs 20.62% 2010-11 2248.47 lacs 49.74 lacs 15.55% During the year under consideration, the assessee had shown total turnover of more than ₹ 22.48 crores upon which gross profit of more .....

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eply vide letter dated 05/2/2013, which has been reproduced on page 2 and 3 of the assessment order by the Assessing Officer. After considering the assessee s reply, the ld Assessing Officer held that the assessee had not maintained day to day quantitative and qualitative details pertaining to various items purchases and sold, opening stock etc. In absence of these details, the veracity of the trading account cannot be verified in terms of quantitative as well as qualitative details, therefore, .....

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stones. The assessee had not shown uniform or compatible production or re-cut loss which could justify the correctness and truthfulness of the books of account. Similarly the rejection of goods also not verifiable from the record, therefore, the Assessing Officer gave a notice as to why books of account should not be rejected U/s 145(3) of the Act and also proposed to apply 18% gross profit rate as applied in the A.Y. 2008-09. The assessee again replied vide letter dated 20/2/2013, which has be .....

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jected the book result U/s 145(3) of the Act. He relied on the decisions of Hon'ble Supreme Court in the case of CIT Vs. British Paints India Ltd. 188 ITR 44 (SC) and CST Vs. H.Esuf Ali, H.M. Abdul Ali 90 ITR 271 (SC). After discussing the legal position, the ld Assessing Officer held that gross profit rate @ 20% was applied in A.Y. 2002-03 and subsequent years mainly in the ground there were unverifiable purchases from certain bogus parties. However, during the current year no unverifiable .....

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see. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had deleted the addition by observing that the ld Assessing Officer applied G.P. rate on the basis of assessment made in A.Y. 2008-09 as the ld predecessor vide order dated 12/12/2011 decided the appeal for A.Y. 2008-09, in which the trading addition made by the Assessing Officer was deleted. He has reproduced the finding of the ld CIT(A) for A.Y. 2008-09 on pages Nos. 11 to 1 .....

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r wastage in the manufacturing. Similarly the percentage of wastage/rejection would also depend on the quality of raw material. He further relied on the decision in the case of Hon ble Punjab & Haryana High Court in the case of CIT Vs. Om Overseas 315 ITR 185 (P&H) on rejection of books of account, not pointed out any specific defect. The ld Assessing Officer had rejected the books of account only on the ground that the assessee had not been able to get records of raw material consumed i .....

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y business. The gross profit rate declared during the year is more than all the years except A.Y. 2009-10. The ld Assessing Officer issued the show cause notice for rejection of book result as well as application of G.P. rate on the basis of finding given for A.Y. 2008-09, which has been deleted by the ld CIT(A) and confirmed by the Hon ble ITAT. Therefore, he allowed the appeal. 4. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer. At .....

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and circumstances of the assessee s case are identical. In the year under consideration, the turnover of the assessee was more than ₹ 22.48 crores and gross profit declared more than ₹ 3,49 crores with G.P. rate @ 15.55% in comparison to A.Y. 2009-10 where gross turnover was more than ₹ 18.45 crores with G.P. more than ₹ 3.55 crores with G.P. @ 19.25%. The GP was lesser by about 5.54 crores only in A.Y. 2009-10, which is evident from statistics submitted by the assessee .....

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al gross profit has to scale down export sale prices which resulted in lower rate of gross profit but more total gross profit. Further submitted to the ld Assessing Officer that in A.Y. 2010-11 exchange rate of US dollar in which exports are made were continuously falling down and it resulted in lesser realization of export value by over ₹ 61 lacs which effected G.P. rate by about 2.74% (Statement submitted in support of contention) and further cost of raw material increased due to continu .....

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urnover of assessee company for A.Y. 2009-10 was lowest. The history of declared results for all past years will show that in this A.Y. 2010-11, G.P. rate is higher from all past years except in A.Y. 2009-10. The turnover of A.Y.(s) 2002-03, 2004-05 and 2005-06 are similar to this year and marginally lower from A.Y.(s) 2003-04, 2006-07 and 2007-08 wherein declared gross profit rate was much lower but those were also accepted in assessment. Thus looking to these facts the declared gross profit ra .....

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