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The A.C.I.T., Circle Patiala Versus Sh. Shamsher Singh, Avtar Singh, Sharanjit Singh & Kawalit Singh L/H of late Sh. Hari Gopal Singh

2016 (5) TMI 1096 - ITAT CHANDIGARH

Rejection of books of account - addition made on account of undervaluation of closing stock - Held that:- The books are rejected by the Assessing Officer solely on the basis of the fact that stock register has not been maintained by the assessee. The assessee is in the business of making sweets, etc. and he has given a plausible explanation as regards non-maintenance of stock register, without rebutting his explanation, the Assessing Officer has rejected the books. As regards inter branch transf .....

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bring on record any manipulation on G.P. rate of the assessee, which in this case, he has not been able to do. Rather, he has not even able to contradict the comparative G.P. rates as provided by the assessee even after taking into consideration these expenses as a part of trading account. Above all, the explanation of the assessee that all these expenses have nothing to do with the manufacturing of the products and are essentially a part of Profit & Loss Account, is also a correct explanation. .....

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e undisputed facts are that the assessee has got certain packing material printed. The raw material for printing was not supplied by the assessee. The definition of contract as provided under section 194C, clause (vi) of the Act was introduced in the Statute to be applicable w.e.f. 11.10.2009. In view of this, no addition under section 40(a)(ia) can be made in this regard.- Decided against revenue

Addition under section 36(1)(iii) - Held that:- No infirmity in the order of the learned .....

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For the Appellant : Shri Sushil Kumar, CIT DR For the Respondent : Shri K.P. Bajaj ORDER Per Rano Jain, A. M. The appeal filed by the Revenue is directed against the order of learned Commissioner of Income Tax (Appeals), Patiala dated 26.3.2014 for assessment year 2009-10. 2. The ground Nos.1 and 2 relates to rejection of books of account and addition made by the Assessing Officer on account of undervaluation of closing stock. 3. Briefly, the facts of the case are that during the assessment pro .....

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77; 1,12,09,160/-, the quantification of which was not possible in the absence of stock register. In response to the show cause, the assessee explained that it was not possible to maintain stock register in assessee's line of business. As regards bardana, it was stated that most of the goods purchased are in polypacks having no or negligible value. The same are either used to send goods to various branches or in the process of use and reuse it gets un-serviceable or un-saleable. As regards q .....

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books of account of the assessee. He made addition of ₹ 54,45,107/- on account of expenses on fancy packs, generator and consumables being claimed in the Profit & Loss Account rather than the trading account. 4. Aggrieved by this order, the assessee went in appeal before the learned CIT (Appeals). As regards the rejection of books of account, it was submitted that the books of account were maintained in the regular course of business and are audited. Non-maintenance of stock register c .....

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ut from the sale price the estimated margin of profits. Since the income from all branches are assessed in the hands of the assessee, Shri Hari Gopal Singh, Proprietor, the value put in respect of stock transferred becomes irrelevant. As regards expenses like fancy packing, generator and consumables, it was stated that these items were being treated like this all along. Further fancy packs have nothing to do with the manufacturing process. They are meant for marketing products. Generator is used .....

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asked for the comments of the Assessing Officer on the submission of the assessee, who vide his letter No.656 dated 1.11.2012 relied on the assessment order only. The assessee made elaborate counter comments, reiterating the submissions earlier made. The learned CIT (Appeals) after considering all this held that this is not a case fit for rejecting the books of account. As regards the addition of ₹ 54,45,017/-, the learned CIT (Appeals) allowed this ground in favour of the assessee on the .....

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learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the learned CIT (Appeals), we do not find any infirmity in his order. The books are rejected by the Assessing Officer solely on the basis of the fact that stock register has not been maintained by the assessee. The assessee is in the business of making sweets, etc. and he has given a plausible explanation as regards non-maintenance .....

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ount does not actually make any difference to the income taxable in the hands of the assessee, unless the Assessing Officer is able to bring on record any manipulation on G.P. rate of the assessee, which in this case, he has not been able to do. Rather, he has not even able to contradict the comparative G.P. rates as provided by the assessee even after taking into consideration these expenses as a part of trading account. Above all, the explanation of the assessee that all these expenses have no .....

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llusioned mind of the Assessing Officer. In this view, we dismiss the ground of appeal raised by the Department. 7. Ground No.3 is against the action of the learned CIT (Appeals) in deleting the addition of ₹ 87,95,636/- made by the Assessing Officer on account of non- deduction of TDS under section 40(a)(ia) of the Act. 8. The Assessing Officer made disallowance of an amount of ₹ 87,95,636/- under section 40(a)(ia) of the Act observing that the assessee contracted manufacturing of p .....

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nt or specification of customer by using material purchased from such customer. This definition is applicable w.e.f. 1.10.2009. Therefore, no TDS is required to be deducted. The learned CIT (Appeals) allowed this ground of appeal by the assessee, observing that the printing of name on the packing material supplied by the assessee cannot be termed as contract. Relying on the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs.. CAO Markfed, 304 ITR 17, the learned CI .....

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aterial for printing was not supplied by the assessee. The definition of contract as provided under section 194C, clause (vi) of the Act was introduced in the Statute to be applicable w.e.f. 11.10.2009. In view of this, no addition under section 40(a)(ia) can be made in this regard. The ground No.3 raised by the Revenue is dismissed. 11. The ground No.4 raised by the Revenue is against the action of the learned CIT (Appeals) in deleting the addition of ₹ 30,98,957/- made by the Assessing O .....

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on said loans, relying on the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Abhishek Industries, 286 ITR 1 (P&H). 14. Before the learned CIT (Appeals), it was submitted that M/s Sampuran Estates Pvt. Ltd. is the landlord of the premises SCO No.20-21, Sector 8, from where the assessee has been operating. As per clause 5 of the agreement with M/s Sampuran Estates Pvt. Ltd., it has been stated that a sum of ₹ 2 crores had to be give as security. Furth .....

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as ₹ 2 lacs, which is lower than the market rate. The lower rent was accepted on the condition that monthly instalment of loan at ₹ 3,40,000/- will be supplemented to the extent of ₹ 1,40,000/- by the assessee. Copies of agreements were filed and it was pleaded that since loans were given out of commercial expediency, no addition under section 36(1)(iii) of the Act be made. The learned CIT (Appeals) after considering the submissions of the assessee, allowed this ground of the a .....

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