TMI Blog2017 (6) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... offered by the assessee was accepted. In light of above, following the orders of the Coordinate Benches and the assessee’s past history, we donot see any justification for AO to interfere with the G.P rate of 20.79% offered by the assessee. In the result, addition of ₹ 21,00,160 is hereby deleted Disallowance made towards travelling, postage, telephone, officer repair and maintenance, etc holding that these were not fully supported by proper bills and also due to the personal element in these expenditure. The ld CIT(A) found the disallowance towards travelling expenses at 15% is on the higher side and restricted it to 10% and rest all disallowances were confirmed. - ITA No.102/JP/16, ITA No.103/JP/16 - - - Dated:- 25-5-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri H.M. Singhvi For The Revenue : Shri R. A. Verma (Addl.CIT) ORDER PER SHRI VIKRAM SINGH YADAV, A.M. These are two appeals filed by the assessee against the order passed by ld. CIT(A) -2, Jaipur dated 17.11.2015 for A.Y. 2011-12 2012-13 respectively. ITA No. 102/JP/16 The grounds of appeal taken by the assessee are as under:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee since beginning. Physically stock verification is done at the close of the year and closing inventory of raw material, stitching material, etc. and finished goods is prepared. The closing stocks of raw material, stitching material and finished goods have been valued at cost or market value whichever is lower which is normally accepted principle of valuation of stock. The assessee filed return of income declaring income of ₹ 2412810/-. The case was selected for scrutiny and notices u/s 143(2) and 142(1) were issued. During the course of assessment proceedings the assessee filed all the explanations and details which were asked by the AO and books of accounts were produced. The same were checked by the AO on test basis. No specific defects were pointed. The GP rate declared by the assessee was better in comparison to the immediately previous year. The assessee manufactured these garments which are approved by the foreign buyers. 4.1 The reasons mentioned by the AO for not accepting the Trading results are as under:- A) The books of accounts of the assessee have continuously been rejected in the proceeding assessment years. B) The assessee does not maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary power, in the context imposes a statutory duty on the AO to examine in very case the method of accounting employed by the assessee and to see whether or not it has regularly employed and to determine whether the increase, profits and gain of the assessee could be properly deducted. 3. Whether the presence or absence of stock register is material or not would depend upon the type of business. Delhi High Court in CIT v. Superior Crafts 353 ITR 101 and Poonam Ram 326 ITR 223 has held that stock register not must. 4. Punjab and Harayana High Court in case of Pandit Brothers 26 ITR 159, pg 166-167 has held that there is no stock register only caution the assessing Officer against the falsity of the returns made by the assessee. He cannot say that merely because there is no stock register the account books must be false. 5. Allahabad High Court in the case of Ram Avtar Ashok Kumar v. CST (1980) 45 STC 366 has held that in making as assessment for a particular year the accounts books for that year alone to be considered as each assessment year in independent. It cannot be merely assumed that merely because for some reason the accounts books in the earlier years was rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that it is manufacturing deferent products every year and in A.Y. 2007-08, the book result of the assessee itself showed a GP rate in excess of 30% against which the CIT(A) sustained an addition of only ₹ 30,381/- by applying GP rate of 31%. Thereafter, in A.Y. 2008-09, the CIT(A)-II, Jaipur ( in appeal No. 239/10-11) has held as under- Assessing Officer rejected the books results under section 145(3) of the ground that appellant did not maintain day-to-day stock register and proper vouchers for expenses. Assessing Officer also relied upon several judicial decisions which are directly applicable to the facts of the appellant s case. As against this, appellant submitted that book results cannot be rejected merely on fall in GP and in support of this contention, appellant submitted certain judicial decisions. However on a plain reading of assessment order and appellant s submission, there is no doubt that the maintenance of books of account, vouchers and s stock register clearly warrants rejection of books results. Accordingly, Assessing Officer is justified in not accepting the assessee s books result. The book result rejected under section 145(3) as accordingly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd held as under:- 2.8 We have heard the rival contentions and pursued the material available on record. As the facts emerges that the assessee is a 100% exporter of the readymade garments and books of account are duly audited and supported by records. There is no adverse comments about the transactions, expenditure and stock maintenance, comparative stock inventory prepared by the assessee is based on the record and lower authorities have not pointed out any specific defects in the valuation of the closing stock and items. In our considered view, the books of account of the assessee cannot be rejected in such casual manner and summary manner. We find merit in the arguments of the ld. AR of the assessee that maintenance of day today production stock in the readymade garments trade is impossible to be maintained by the assessee. Adverse inference drawn about the expenses under the head stitching, embroidery, dying and printing being high have neither been justified ld. AO nor any disproportionness in comparative figure has been demonstrated. Thus in our view, the books of account of the assessee are not liable to be rejected. Our view are fortified by the following decisions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, coming to ground no. 2 of the assessee s appeal, the disallowance were made by the Assessing Officer towards travelling, postage, telephone, officer repair and maintenance, etc holdingthat these were not fully supported by proper bills and also due to the personal element in these expenditure. The ld CIT(A) found the disallowance towards travelling expenses at 15% is on the higher side and restricted it to 10% and rest all disallowances were confirmed. We donot see any reason to interfere with the order of the ld CIT(A) and the same is hereby confirmed. In the result, the assessee ground is dismissed. ITA No. 103/JP/16 9. Identical grounds of appeal have been taken by the assessee regarding rejection of books of accounts and estimation of G.P rate by the AO @ 31% as against G.P rate of 23.71% disclosed by the assessee on turnover of ₹ 2,49,36,610. Similarly, the ground no. 2 relates to disallowance of travel expenses. Undisputedly, there are no changes in the facts and circumstances of the case vis-a-vis the facts and circumstances as discussed in ITA No. 102/JP/2016. Our findings and directions contained therein shall accordingly apply mutatis mutandis to this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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