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2016 (2) TMI 663 - ITAT DELHI

2016 (2) TMI 663 - ITAT DELHI - TMI - GP Rate adoption - rejection of books of accounts - Held that:- Records show that the contention of the DR that books of accounts were not produced before Assessing Officer was not correct. As relates to rejection of books of accounts maintained by the assessee by the Assessing Officer without assigning any proper reason is not proper. The Assessing Officer has not taken into account all the invoices, bills related to the export orders, which should have bee .....

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No.-1210/Del/2011 - Dated:- 15-1-2016 - SHRI INTURI RAMA RAO ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. K. Sampath, Adv. For The Respondent : Sh. Raman Kant Garg, Sr. DR. ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against order dated 1/12/2010 passed by Ld. CIT(A) XXVIII, New Delhi for the A. Y 2004-05. 2. The grounds of appeal are as follows:- 1. That on the facts and the circumstances of the case the Authorities below were not jus .....

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Appeals)-XXVII was not justified in confirming the Rejection of Trading Results and the books of accounts u/s 145(3) even when all the documents and books of accounts were produced before the Ld.CIT(A) Assessing Officer and the Compilation of documents justifying the trading results were filed before the Ld.CIT(A) Commissioner of Income Tax Appeals-XXVIII. 3. That on the facts and circumstances of the case the Ld. CIT(Appeals)- XXVIII was not justified in confirming the adoption of the Rate of G .....

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onableness of the payments made to persons specified u/s 40(a) (2b) in terms of Section 40A(2a). 3. The assessee is proprietor of M/s Alankar Creations which is an exporter of Readymade Garments. According to Assessee, apart from business which was not yielding any profit, prompting the assessee to forego deduction available u/s. 80HHC, the assessee also has income from finance operations, property and investment income. Capital gain as well as loss has also been admitte don sale of investments. .....

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of ₹ 1,25,611/- only. The business was yielding zero (negative income) inserted a closer look despite the constraints of time on account of being the transactional year when limitation stands preponed in addition to several instances of default in representation. The position of gross profit obtaining in the garment export business can be illustrated as under:- F.Y 2001-02 F.Y 2002-03 F.Y 2003-04 Sale 9,06,50,735 11,98,15,532 10,35,87,956 Gross Profit 2,39,59,140 1,97,19,704 1,16,34,943 G .....

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00 iii Salary of staff provided 2,40,000 iv Maintenance charges 1,20,000 v. Security Services. 1,20,000 5. Another payment of ₹ 76,150/- towards Exhibition Charges had been paid to M/s RTF Promoters & Builder Pvt. Ltd., another closely held company of the assessee. While fabrication charges paid to the company was booked in the trading account rest of the expenses incurred have been booked in the profit and loss account. Closing stock inventory as the cost of the accounting year in res .....

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ummarized by Assessing Officer as under:- S. No. Items Qty. Mfd. Qty. FOB Sale Value Resultant G.P as per Costing Sheet 1 Boys Pant 1052 Pcs 1020 Pcs 2,62,334 16.32% 2 Cotton Ladies Blouse 2062 Pcs 2000 Pcs 3,39,047 22.80% 3 Men Shirt 3298 Pcs 3228 Pcs 7,67,941 39.89% 6. The Assessing Officer observed that the assessee was not able to explain the sharp disparity in the resultant G.P with the over G.P rate of 10.24% obtaining in the year under review as well as not able to identify any particular .....

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s not satisfied with the explanation given by the assessee and thus rejected the trading results and determination the gross profit on application of moderate method. The Assessing Officer further observed that the assessee has admitted a gross profit of ₹ 1,16,34,943/- at 10.24% on a turnover of ₹ 10,35,87,956/- this substantially was lesser than what was admitted in the earlier years. The GP rate illustrated in the Costing Sheet as furnished by the assessee and after considering th .....

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nvoking the provisions of Section 145(3). The Ld. CIT(A) further held that the assessee fail to explain the decline GP rate and the estimated GP rate at 15% is justified and the Assessing Officer s order deserves to be approved. Thus, dismissing the appeal of the assessee. The assessee is before the Tribunal for the contesting grounds preferred hereinabove in Para 2. 8. The AR submitted that the assessee is in the business of fabrication of export quality material, the assessee is the proprietor .....

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ate his claims in the support of the books of accounts return in the normal course of business. The assessee has maintained complete books of accounts return in the normal course of business including stock registers, the complete details of the sales, purchases and the expenses was fully maintained by the assessee and were produced before the Assessing Officer no discrepancy was found in the records of purchased of sales by the Assessing Officer and yet the Assessing Officer chose to frame the .....

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