TMI Blog2017 (11) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... nd confirmed the order passed by CIT(A). 2. This Court while admitting the appeal on 16.11.2016 framed following substantial question of law:- Whether the Tribunal is justified in upholding the decision of CIT(A) of making ad-hoc addition of ₹ 5 Lac by deleting the trading addition u/s 145(3) of ₹ 73,94,581/- made by the Assessing Officer on the basis of non-maintenance of stock register and decline in GP rate despite Sales constant? 3. Counsel for the appellant has taken us to the order passed by AO and CIT(A) and contended that AO and CIT(A) have seriously committed an error by reversing the observations made by AO, wherein it has been observed as under:- In the light of aforesaid observations and case laws the books are rejected under provision of Section 145(3) and assessment is framed in the spirit of section 144. The G.P. chart is reproduced below:- A.Y. Turn Over Gross Profit G.P. Rate 2006-07 49506341 17324217 34.99% 2007-08 75250149 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the quantitative stock register in respect of raw material work in progress and finished goods. The assessee failed to produce even the stock inventory dated 31.03.2008. It means that books are not properly maintained and are not trust worthiness:- a) The Hon ble Supreme Court in the case of S.N. Samasivayam Chettair 38 ITR 579 has held that Keeping of stock register is of great importance because it the means of verification of assessee s account. After taking into account will material facts, including the want of stock register it is found that proper profit is not deductible applicable of provision of section 145 is justified. b) The Hon ble Bombay High Court in case of Basti Ram Narayan Das Maheshwari V/s CIT reported on 210 ITR page 438 held that non maintenance of day to day consumption register can lead to rejection of books of account according to the provisions of section 145 of the Income tax Act. In the present case also the assessee has not maintained day to day record of consumption of material. No proper records related to sites are maintained out of which true and proper income could have deducted. c) The Hon ble Supreme Court in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e differences, finished process and also the size, length and width of production is different, which cannot be possible to maintain stock register, therefore, the assessee has not ACIT Vs. M/s Handmand Paper Board maintained quantitative and qualitative stock register, but the assessee had recorded purchase and sale and other expenses on the basis of bills vouchers and closing stock was taken on the last of the previous date, which has been verified and valued property and disclosed in the P L account and balance sheet. He further argued that whatever defects pointed out by the Assessing Officer are not sufficient to justify the rejection of books of account U/s 145(3) of the Act. The ld Assessing Officer made the addition on the ground that in preceding year, the GP was higher than the GP disclosed during the year under consideration but in the business line, the number of internal and external factors affect the performance of the business. Some of them are beyond the control of the assessee. The market competitive, there is recession in other countries, which affects the assessee, demand and supply and also price. The ld Assessing Officer applied 33% GP without pointed out an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l No. 1249 of 2007 in favour of the assessee and against the Department. 7. Now, insofar as, the questions raised in Tax Appeal No. 1250 of 2007 and Tax Appeal No. 1253 of 2007 are concerned, in paragraph No. 14 of its judgment, the Tribunal has observed as under: 14. Now coming to the second aspect that workers engaged by labour contractors are to be counted while counting number of workers. The answer is in affirmative and it is supported by the decision of Jurisdictional High Court in the case of CIT vs. Prithviraj Bhoorachand (supra) wherein their Lordships have observed as under:- As can be seen, the term employed by the statute is, employs twenty or more workers. The plain dictionary meaning of the said term 'employ' is to use the services of a person in return for payment. Clause (iv) of s. 80I(2) of the Act does not contemplate the additional requirements - which have been read into the same by the CIT. As long as the industrial undertaking manufacturers articles or things; and where the manufacturing process is carried on without the aid of power, it employs twenty or more workers, the requirements of the provision are fulfilled. When the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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