9911796707
TMI Blog2017 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... e. average of G.P. rates of A.Y. 2007-08 and A.Y. 2006-07 despite the veracity of books of accounts of A.Y. 2007-08 is itself in serious doubt." In the Cross objection, the assessee has raised the following ground:- "1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the application of provisions of section 145(3) and further erred in upholding the trading addition of Rs. 31,82,271/- arbitrarily." 2. The assessee is a state owned company and engaged in the business of manufacturing and trading of cotton, woolen and synthetic, handloom fabrics. During the course of assessment proceedings, the Assessing Officer noted various defects and discrepancies in the books of account and also taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn with depots have not been received from most of the depots and unit incharge. The auditor has also pointed out that the physical verification of inventory of the assessee has not been done during the year. Hence, the impact of shortage and misappropriation could not be ascertained. Further, the bank balances in 10 banks accounts were un-reconciled since long and the assessee had defaulted in payment of loans to the banks. Even the copies of the stock statement filed with the banks were not produced before the auditor apart from other various discrepancies regarding unutilized grants and sundry creditors remained unverified due to inadequate details. Thus, the ld. DR has submitted that the Assessing Officer was justified in rejecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier year remained statistic as there is no change in the stock during the year under consideration. Hence, ld. AR of the assessee has submitted that there is no defect in the books of accounts for the year under consideration as these defects in the stock are being carry forward from the earlier year. He has further submitted that there is no question of suppressing the income as the assessee is doing the activity without any profit motive. The ld. AR has referred to comparable details of the closing stock and submitted that there is no change in the year under consideration except for one item. The assessee has no stock of raw material and no manufacturing carried out by the assessee, therefore, there cannot be discrepancies in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account. Therefore, the books do not reflect the correct picture of the state of affairs of the assessee and consequently the income as reported by the assessee. Accordingly, in view of the facts and circumstances of the case we do not find any error or illegality in the orders of the authorities below to the extent of rejecting the books of accounts of the assessee U/s 145(3). Resultant, the cross objection of the assessee to the extent of the rejection of books of account are dismissed. 6. As regards the grievance of the Revenue that the ld. CIT(A) has applied the gross profit rate 10.28% instead of 21.96% we are of considered opinion that once the books of accounts are rejected u/s 145(3), the income of the assessee is required t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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