TMI Blog2017 (4) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Maharaja Shree Umed Mills Ltd. [1991 (5) TMI 46 - RAJASTHAN High Court] and Ramjivan Jagannath Vs. ACIT (2006 (10) TMI 145 - RAJASTHAN HIGH COURT) wherein it has been held that the gross profit rate cannot be looked into when the Assessing Officer has not rejected the books of account of the assessee and without making this as a base, it could not be said that the expenditure has been inflated. In the present case, admittedly, the Assessing Officer has not rejected the books of account. He has not given the basis for making ad hoc disallowance, therefore, we direct the Assessing Officer to delete the disallowance. This ground of the assessee’s C.O. is allowed. - ITA No. 963/JP/2016, C.O. No. 46/JP/2016 - - - Dated:- 21-4-2017 - Shri Kul Bharat, JM And Shri Vikram Singh Yadav, AM Revenue by : Shri R. A. Verma (Addl.CIT) Assessee by : Shri P. C. Parwal (CA) ORDER Per Kul Bharat, J. M. ITA No. 963/JP/2016 filed by the revenue and C.O. No. 46/JP/2016 filed by the assessee arise against the order dated 22/08/2016 passed by the ld. CIT(A)-2, Jaipur for the A.Y. 2012-13. 2. The appeal of the revenue and the assessee s C.O. are being heard together and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partner has brought in fresh capital by raising funds from third party for which cheque was issued in the name of the firm, the partner s capital account would be credited and the money shall brought to the bank of the firm. He submitted that there is no requirement of law or accounting principles and practices that the money should first come in the bank account of the partner and then from that bank account to the bank account of the partnership firm. He submitted that to save time and inconvenience, the partner was well within his right to make arrangement for direct remittance of the funds to the bank account of the partnership firm. He submitted that the fact that the amount is not the undisclosed income of the firm and is a foreign remittance received from M/s Gems Exports Ltd. on behalf of Nirmal Mundra is verifiable from the confirmation of Mrs. Mukesh Mundra on behalf of M/s Gems Exports Limited. He submitted that the ld. CIT(A) has rightly deleted the addition. 8. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the authorities below. We find that the ld. CIT(A) has given a fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n application under rule 46A to admit additional evidence in the form of the balance sheet of M/s Gems Export Ltd. and the outward remittance advice issued by the HSBC bank. Considering the circumstances, the additional evidence were admitted and forwarded to the Assessing Officer for his comments. In the remand report received on 23.03.2016, relevant paras reproduced below, wherein he has rejected the documents stating that the same are not audited and authenticated and hence veracity cannot be ascertained. Without prejudice to above, it is submitted that the assessee was provided sufficient opportunity to produce income details of M/s Gems Exports Limited, Hong Kong but the assessee failed to submit any details. Now the assessee has submitted details/ documents before your goodself in this matter it is submitted that these documents are not authenticated by anyone. These are not an audited documents. Veracity of these documents cannot be ascertained as inquiry regarding foreign companies can only be carried out by the DIT, FT TR, New Delhi. As Hong Kong is not having DTAA with India therefore, any enquiry from Honk Kong is not possible. Under these circumstances it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t see any reason to interfere into the order of the ld. CIT(A) and the same is hereby confirmed. The ground raised in the revenue s appeal is dismissed. 9. Now we take C.O. of the assessee being C.O. No. 46/JP/2016. In the C.O., the assessee has raised following grounds of appeal: 1. The ld. CIT(A) has erred on facts and in law in confirming the disallowance of claim of deduction U/s 8-IB of ₹ 7,23,299/-. 2. The ld. CIT(A) has erred on facts and in law in confirming the lump sum trading addition of ₹ 2,00,000/- to the trading results declared by the assessee. 10. Ground No. 1 of the C.O. is against disallowance U/s 80IB of the Act. The ld AR of the assessee has reiterated the submissions as made in the written submissions. The ld AR has submitted as under:- 1. It is submitted that the lower authorities have erred in not correctly interpreting the provisions of sub-section (1) and sub-section (3) of section 80-IB. It is an admitted fact that production or manufacturing began in November 2001 falling in financial year 2001-02. 2. Initial assessment year as per sub-section (14) means the assessment year relevant to the previous year in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is admissible for ten assessment years, the number ten cannot be reduced to a lower figure by adopting restrictive and narrow interpretation. The number is qualified only by the requirement that the ten assessment years should be consecutive. The expression number has been qualified by the word such. It means the number cannot be decreased on the ground that the assessee did not claim the deduction in the initial assessment year, for whatever reason. (iv) There is no requirement of the provisions of sub-section (3) to include the initial assessment year in the block of ten assessment years is further proved by the language of sub-section (9) of section 80-IB. In sub-section 9, it is laid down that the deduction shall be for a period of seven consecutive assessment years, including the initial assessment year (emphasis added). It is abundantly clear that for the assessee claiming deduction in terms of the provisions of sub section (9), it is compulsory for the assessee to include the initial assessment year in the period of seven consecutive assessment years. If the assessee does not include the initial assessment year then he would be left with six consecutive assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a finding on fact by observing as under:- 4.3 I have considered the facts of the case, assessment order and the written submissions of the appellant. The assessee has claimed deduction U/s 80IB for an amount of ₹ 7,23,299/- as profits derived from eligible under taking Perfect Glass accessories the Assessing Officer disallowance the same as the initial assessment year being 2002-03 the deduction would have been claimed till assessment year 2011-12 and not 2012-13. The authorized representative contended that since the assessee had commenced the claim of deduction from assessment year 2003-04, it was eligible to claim the deduction upto the assessment year 2012-13. In view of the provisions of Section 80IB(3) and 80IB(14)(c) which defines the initial assessment year and also as the audit report itself certifies that the operation of the undertaking commenced from Nov, 2001 and thus the initial assessment year being assessment year 2002-03, the disallowance made by the Assessing Officer is correct and upheld. The ground of appeal is dismissed. This finding of fact is not controverted by the ld. Counsel for the assessee, therefore, we do not see any reason to interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is volume can be achieved only by increasing the sales by reducing the margin. During the year assessee has increased sales from ₹ 3.03 crores to ₹ 4.18 crores and the overall gross profit has been increased from ₹ 1.35 cr to ₹ 1.85 crores though the G.P. rate has declined slightly by 0.43%. In the various cases it has been held that simply because there is decline in the G.P. rate due to substantial increase in the turnover, the trading addition is not justified. For this purpose reliance is placed on the following cases:- Madan Lal V. Income tax Officer 99 TTJ 538 (Jd.) It was held that the estimation of the income has to be made only on the basis of some logic and the past history is the best guide except in cases where the assessee is liable to explain that the figures of the past year can t be applied in the relevant year. The assessee has explained the fall in the G.P. rate by referring to steep increase in turnover which was achieved by reducing the selling price and giving more discount. Accordingly, it was held that the G.P. rate declared by the assessee could not be disturbed in the absence of any specific defect in the books of accounts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind to the existing material which were relevant and went to the root of the matter. When all the data and entries made in the trading account were not found to be incorrect in any manner, there could not have been any other result except what has been shown by the assessee in the books of accounts. Therefore, the order of the Tribunal cannot be sustained. In view of above, the lumpsum trading addition of ₹ 2,00,000/- confirmed by the CIT(A) is uncalled for and be deleted. 14. On the contrary, the ld DR has vehemently supported the orders of the authorities below. 15. We have heard the rival contentions of both the parties and perused the material available on the record. The Assessing Officer has not rejected the books of account. The assessee has been maintaining details. Ld. AR has relied upon the decision of the Hon ble Rajasthan High Court in the case of CIT Vs. Maharaja Shree Umed Mills Ltd. 192 ITR 565 and in the case of Ramjivan Jagannath Vs. ACIT 207 CTR 19 (Raj), wherein it has been held that the gross profit rate cannot be looked into when the Assessing Officer has not rejected the books of account of the assessee and without making this as a base, it could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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