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2015 (12) TMI 900 - ITAT AHMEDABAD

2015 (12) TMI 900 - ITAT AHMEDABAD - TMI - Addition made on account of suppression of sales - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding that it has not been shown by the AO that the assessee has wrongly recorded the sale price in the books. He further observed that this observation leads to suspicion and can be the starting point for investigation but this cannot be the basis for rejecting the books. The A.O. should have carried out inquiries with the buyers to confirm .....

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ame is hereby upheld - Decided against revenue - ITA No. 1848/Ahd/2012 - Dated:- 30-11-2015 - G. D. Agarwal, Vice President (AZ) And Kul Bharat, JM For the Appellant : Shri Rakesh Jha, Sr. DR For the Respondent : Shri R N Vepari, AR ORDER Per Kul Bharat, Judicial Member This appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-IV, Surat ['CIT(A)' in short] dated 11/05/2012 pertaining to Assessment Year (AY) 2008-09. The Revenue has raised the .....

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3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A), Surat ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the Ld.CIT(A)-IV, Surat may be set-aside and that of the Assessing Officer's order may be restored. 2. Briefly stated facts are that the assessee electronically filed the return of income for AY 2008-0-9 showing total income of ₹ 54,64,450/- on 30/09/2008. A survey action u/s.133A of the Income Tax A .....

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the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Act was framed vide order dated 30/12/2010. During the course of assessment proceedings, the AO observed certain defects in the books of account and proceeded to reject the book results. While framing the assessment, the AO made addition on account of suppression of sales of ₹ 23,54,825/- as per Annexure BF-15. The AO further made addition of ₹ 6,47,300/- on account of suppression of sales as per .....

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that the ld.CIT(A) was not justified in deleting the addition. He reiterated the submissions as were made in the statement of facts. 3.1. On the contrary, ld.counsel for the assessee supported the order of the ld.CIT(A) and submitted that the assessee derives income from trading activities in furniture, artificial items, tiles and ceilings. A survey action u/s.133A was conducted on 25/02/2008 and partner of the assessee-concern, Shri Keyurbhai disclosed income of ₹ 50 lakhs which has been .....

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o the AO, however, on page-16 of Swastik Construction, there is mention of sofa set ₹ 2,96,500/-. Again on page 31 on card of Patel Fibre Sofa, there is mention of ₹ 2,55,000/-. On page 37, sales made to Shri Bharat Mevada of T-T at ₹ 29,500/-. Annexure B-4 containing telephone numbers and business cards and they cannot be interpreted as sales as the AO contends. He submitted that Annexure B- 15 is a catalogue showing various items sold but in very few items, the selling price .....

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ear how 189.54% is worked out since the gross profit has been shown at ₹ 48,34,563/-, the income to be added has been determined at ₹ 73,54,825/, whereas disclosure was ₹ 50 lacs and, therefore, addition of ₹ 23,54,825/- has been made. He submitted that another reason for rejection is that copies of sales bill remained unsigned. He submitted that from the above, it would be clear that these cannot be grounds for rejection of books and, therefore, the ld.CIT(A) in para-2.2 .....

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n record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided the issue regarding addition of ₹ 23,54,825/- in para-2.2 of his order by observing as under:- "2.2. I have gone through the facts of the case. The case of the A.O. for rejecting the books is based mainly on the fact that there was huge difference in the price mentioned in the catalogue and the price recorded in the books and the fact that the sale bill copy remaining with the assesse .....

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ces, the material with the A.O. could at best raise doubts about the books but cannot be said to be conclusive evidence of defects in the books. It is not been shown by the A.O. that the assessee had wrongly recorded the sale price in the books. His observation leads to suspicion and can be the starting point for investigation but this cannot be the basis for rejecting the books. The A.O. should have carried out inquiries with the buyers to confirm his suspicion before concluding that the books .....

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d sample and without regard to the actual sale price and therefore resulted hi abnormal profit margins. It has also argued that hi his calculations the A.O. has failed to take genuine direct expenses like customs, transportation and octroi and if these are considered then even with the method adopted by the A.O. there would be no excess income after considering the book profits and additional income disclosed during survey. Even if the objections raised by the assessee regarding discount rate, u .....

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he A.O. at . 64,31,0897-), the gross profit would be approx. . 82 lakhs which is less than the aggregate of gross profit shown in the books and additional income offered during survey (.48,34,563/- plus .50,00,000/-.). Therefore, there was no reason for making any addition for lower profits/suppression of sales. Hence, for this reason also the addition of .23,24,825/- is required to be deleted. The A.O. is directed to delete the addition of . 23,54,825/-. This ground is allowed." 3.3 We fin .....

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uld not be rejected. We find merit into this contention of the ld.CIT(A) that the AO has not made any enquiry from the buyers to verify the actual sale price. In the absence of the same, in our considered view, the AO was not justified in rejecting the books of account and making the addition. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, this ground (against deletion of addition of ₹ 23,54,825/-) of Revenue's appeal is r .....

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