TMI Blog2017 (6) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... search amounting to ₹ 160 lacs which included ₹ 145 lacs on account of difference in stock and unrealized sales/debtors. Undoubtedly the assessee’s surrender on these counts, which form part of GP, is much more than that being made by the AO and for this reason also there is no justification for making any addition on account of fall in GP. No infirmity in the order of the learned CIT (Appeals) in holding the rejection of books of account by the Assessing Officer as unjustified and deleting the resultant addition by applying GP rate of 16%. - Decided against revenue. - ITA No.825/Chd/2016 - - - Dated:- 2-6-2017 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri Manjit Singh DR For The Respondent : Shri Ashwani Kumar ORDER PER ANNAPURNA GUPTA, A.M. : This appeal has been filed by the Revenue against the order of CIT(Appeals)-5, Ludhiana dated 14.4.2016 relating to assessment year 2011-12. 2. The assessee has raised the following grounds of appeal: 1(i). That the Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 40,55,661/- on account of fall in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of ₹ 160 Lacs surrendered during search has been duly reflected in the books of account; ₹ 110 Lacs as additional income on account of difference in stocks, ₹ 35 Lacs undisclosed/unrealized sales/debtors and ₹ 15 Lacs under the head unexplained documents expenses. The AR submitted that from the above it can be seen that surrender of ₹ 145 Lacs towards difference in stocks and undisclosed/unrealized sales/debtors is more than the addition of ₹ 40,55,661/- made by the AO towards fall in GP rate. Further, ₹ 15,00,000/- was surrendered towards unexplained documents/expenses which is more than the disallowance of ₹ 1,00,000/- made by the AO out of building maintenance repair expenses. 3.1. The AR has also submitted that the GP rate during the year is 14.67 % as compared to 16.07% of the earlier year which is not as low as would invite rejection of books. The assessee maintained regular books of accounts supported by purchase and sales bills and vouchers for expenses and no defects was pointed by the AO in this regard. All the quantitative details were available and supplied to the AO vide reply dated 18.01.2013 filed duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances had upheld the order of the learned CIT (Appeals) deleting the addition made on account of decrease in gross profit rate. Copy of the order was placed before us. 7. The learned D.R., on the other hand, relied upon the order of the Assessing Officer. 8. After considering the rival submissions we find no merit in the grounds of appeal raised by the Revenue. The AO has made addition on account of low GP rate by rejecting the Books of accounts of the assessee. The reason for rejecting the Books was the low GP rate in the impugned year as compared to the preceding year coupled with the fact that quantity-wise detail of purchases, item wise detail of closing stock and stock register had not been produced by the assessee. Further, as per the Assessing Officer, the assessee had also failed to explain the increase in electricity consumption and raw material. The learned CIT (Appeals),we find, has after examining the documents filed before him given a categorical finding that quantity-wise and value-wise details of opening and closing stock and basis of valuation was given to the Assessing Officer as also month-wise detail of purchases and sales. The learned CIT (Appeals) has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO and for this reason also there is no justification for making any addition on account of fall in GP. 11. Further, we find that the Coordinate Bench of the ITAT in the case of M/s Sharman Udyog Pvt. Ltd. (supra), on identical set of facts and circumstances, had upheld the order of the learned CIT (Appeals) holding the rejection of books of account as unjustified. The relevant findings of the I.T.A.T., Chandigarh Bench in the said case at para 4 of the order are as under: 4. After considering rival submissions, we do not find any merit in this ground of appeal of the revenue. There is only small decrease in the gross profit rate as compared to the earlier year. The assessee has maintained regular books of account supported by purchase and sale bills and vouchers of expenses. No specific defects have been pointed out in maintenance of the books of account and vouchers. All the quantitative details were supplied to the Assessing Officer. Books are audited. Net gross profit has increased as against earlier year. It is admitted fact that assessee had already surrendered additional income during the course of search which was towards the discrepancy found during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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