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2015 (12) TMI 1407

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..... rt in case of CIT Vs. Rajinder Parshad Jain, [ 2014 (12) TMI 567 - PUNJAB & HARYANA HIGH COURT] - No infirmity in the order of CIT(A) on this issue. The Gross Profit rate 11.5% as estimated by the CIT(A) seems reasonable in the facts & circumstances of the case. As we have upheld the estimation of Gross Profit @ 11.5% while adjudicating the earlier grounds, no other disallowance of any expenses separately is called for. In view of the above, income having been estimated. Any other disallowance is not warranted. - Decided in favour of assessee. - ITA No. 418/Chd/2015, ITA No. 464/Chd/2015 - - - Dated:- 12-8-2015 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER For The Appellant : Shri Manjit Singh, DR. For The Respondent : Sh. N.K. Sahi , Adv. These cross appeals are filed by the assessee and the department against the order of the CIT(A)-Patiala, dt.26.02.2015 2. The brief facts of the case are that the assessee is a manufacturer of harvester combines. During the assessment proceeding assessee failed to produce the books of accounts such as cash book, ledger, day book, purchase and sale bills and expenditure bills as asked for b .....

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..... rder. 6. As regards the addition ₹ 51,945, it was submitted before the CIT(A) that the assessee has purchases various items vide bill No.61 for ₹ 21,945/- and further purchases vide bill no.62 and these amounts paid to M/s. P. K. Traders are not subject to deduction under section 194C, therefore, is was contended that the provisions of section 40(a)(ia) cannot be invoked in such circumstances. 7. The CIT(A) considered the detailed submissions made by the assessee and looking into the entirety of the facts and circumstances of the case opined that books of A/c are rightly rejected u/s 145(3) of the Income Tax Act and in this case since the appellant itself has shown Gross Profit rate of 11.28% in the assessment year 2008-09, the Gross Profit rate of 11.5% may be taken for this year compared to the Gross Profit rate of 10.59% shown by the assessee as against 12.5% applied by the AO. In this way, the CIT(A) partly allowed this ground of the assessee. 8. As regards the addition of ₹ 51,945/-, the CIT(A) held that the amounts pertain to advertisement expenses and therefore provisions of section 194C are attracted. Therefore the provision of Section 40(a)(ia) a .....

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..... of the assesee was seleted for scruitiny. The assessment was completed u/s 143(3) on 05.12.2011 and the G.P rate of 11.09% was accepted (Copy of the assessment order for the A.Y.2009-10 was also provided). The submission of the assessee has been wrongly ignored by the Ld. CIT(A), Patiala while assuming the G.P. @ 11.50% instead of G.P declared by the assessee @ 10.59% hence the additions on account of higher G.P. @ 0.91% amounting to ₹ 12937665/- 3. Rs,. 51945/- was paid to M/s P.K. Traders for purchase of materials of advertisement Publicity expenses. There items were purchased vide Bill No. 61 of ₹ 21945/- and Bill No. 62 of ₹ 30000/-. The material purchased for advertisement publicity expenses are not subject to deduction of TDS u/s 194C hence no TDS was deducted. These expenses were wrongly added back in the income for the A.Y.2010-11 u/s 40 (a0 (ia0 of the I.T. Act, 1961. the submission of the assessee has been wrongly ignored by the CIT(A), Patiala. The additons of ₹ 51945/- deserves to the deleted. 10. The learned Counsel for the assessee while appearing before us preferred not to press ground No.1 related to the rejection of books of accou .....

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..... essee. In view of the said submissions it was prayed that Gross Profit rate 10.5% shown by the assessee may be upheld. 13. Ld. DR relied on the order of the Assessing Officer and prayed to uphold the Gross Profit Rate of 12.5% as held by A.O. as against 11.5% held by CIT(A). 14. We have heard the rival contentions and perused the material on record. It is undisputed that the books of accounts were never produced before the Assessing Officer. Certain other alarming facts were also found by the Assessing Officer, the obvious conclusion made by him was to reject the books of account. The assessee preferred not to press the ground related to rejection of books of accounts before us. In such a scenario the estimation of Gross Profit rate is a must. The assessee cannot plead to accept the Gross Profit rate as declared by him, when books of A/c and details were not produced before authorities below. The CIT(A), in this case has given a very detailed reasoned finding as to the fact that, why a Gross Profit rate of 11.5% may be applied. He stated in his order at Para 4.3, as follows: 4.3 I have considered the submission made. It is noted that the assessee failed to produce comple .....

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..... R 545. 15. In view of the above, we do not find any infirmity in the order of CIT(A) on this issue. The Gross Profit rate 11.5% as estimated by the CIT(A) seems reasonable in the facts circumstances of the case. 16. In the result, ground No.2 of the assessee s appeal ground No.1-5 of the department s appeal are dismissed. 17. Regarding the addition of ₹ 51,945/-, on Ground No. 3 of appeal of the assessee, learned Counsel for the assessee submitted that the books having been rejected and Gross Profit rate having been estimated a separate disallowance of expenses made by the Assessing Officer is not tenable. 18. The learned DR relied upon the order of the Assessing Officer as well as CIT(A). 19. We have heard the rival contentions and perused the material available on record. Since, we have upheld the estimation of Gross Profit @ 11.5% while adjudicating the earlier grounds, no other disallowance of any expenses separately is called for. Our view gets strengthen by the judgement of the Hon ble High Court of Andhra Pradesh in the case of Indwell Constructions vs. Commissioner of Income Tax(1998) 232 ITR 776, whereby Hon ble High Court held as under: 4. Th .....

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