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M/s Parag Sarupuria Versus Income Tax Officer, Ward-2 (3) , Jaipur

2018 (1) TMI 394 - ITAT JAIPUR

Rejection of books of accounts - invocation of section 145 - estimation of G.P. - Held that:- G.P. rate for the year under consideration was better than immediate preceding year. Further this was a new business started wherein the expenditure on account of rent and the stitching was comparably higher to the other established sister concern units. This fact has been compared with the rent and stitching expenses debited in the P&L account of the assessee and in the P&L account of sister concern in .....

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dings of the AO. However, the disallowance made by the AO appears to be on the higher side. Considering the volume and nature of business of the appellant, it would be fair and reasonable to restrict the disallowance to 50% of the amount disallowed by the AO. CIT(A) has reasonably restricted the disallowance at ₹ 28,866/-, therefore, the same is hereby upheld. - ITA No. 904/JP/2017 - Dated:- 2-1-2018 - SHRI BHAGCHAND, ACCOUNTANT MEMBER For The Assessee : Shri S.L. Jain (Adv) And Shri Ashok .....

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cted for scrutiny. The Assessing Officer made addition of ₹ 10,95,619/- after rejecting books of account and estimating the G.P. rate at 8% instead of 5.26% declared by the assessee. The Assessing Officer also made addition of ₹ 57,732/- out of various expenses debited in the P&L account. The ld. CIT(A) confirmed the G.P. addition and gave part relief from ad hoc disallowance of ₹ 57,732/- from the expenses. 3. Now the assessee is in appeal before the ITAT by taking followi .....

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grossly erred in law and facts in confirming provision of section 145(3) for rejecting the audited books of accounts is not justifiable the books of accounts maintained in regular course of business are presumed to be correct, complete and reliable, and books results cannot be disturbed without any material defect section 30 of Evidence Act. 2. Invalid Trading Addition of ₹ 10,95,619/- by Increasing GP Rate from 5.26% to 8% Arbitrarily:- That on the facts and in the circumstances of the c .....

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our GP rate from 5.26% to 8% arbitrarily without any material facts on record and thus trading additions of ₹ 10,95,619/- are without justification. 3. Invalid Disallowance of ₹ 28,866/- out of Expenses Arbitrarily That on the facts and in the circumstances of the case Ld. CIT(A) has grossly erred in law and facts in confirming lump sum disallowance of ₹ 28,866/- of expenses. Ld. CIT(A) has without mentioning any specific query on specific voucher of any head of expenses disal .....

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e Ld. CIT(A) has grossly erred in law and facts in confirming in charging interest u/s 234B ₹ 124556/- interest u/s 234C ₹ 3364/- and interest u/s 234D ₹ 1700/-. 4. Ground No. 1 (a)&(b) of the assessee s appeal were not pressed at the time of hearing, therefore, the same stands dismissed as not pressed. 5. Ground No. 2 of the appeal is against confirming the trading addition of ₹ 10,95,619/- made on account of enhancing the GP rate from 5.26% to 8%. The ld. CIT(A) has .....

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stock register in terms of quantity as well as quality. The AO has also made certain enquiries u/s 133 (6) of the Act and some of the sales made by the appellant to a number of parties could not be verified. In view of these facts, the AO has invoked the provision of section 145 (3) of the Act and rejected the books of accounts of the appellant and has made trading addition of ₹ 10,95,619/- by applying the GP rate of 8% against 5.26% declared by the appellant and also referring to the cas .....

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t as it has maintained day-to-day stock details. It was further submitted that the AO has applied a GP rate of 8% without appreciating the fact that its trading results were progressive and therefore, the trading addition made by the AO deserves to be deleted. (iii) I have duly considered the submissions of the appellant, assessment order and the material placed on record. It is noted from the details furnished by the appellant during the appellate proceedings that it has maintained quantitative .....

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the auditor has not stated the yield of the finished products from the consumption of the raw material i.e. HDPE/PP Fabric. Further, from the details of stitching charges, it has been observed that month wise payments have been stated therein but details relating to day-to-day production of bags by these labourers were not maintained. It is also an undisputed fact that some of the sales made by the appellant could not be verified as some of the parties had already closed their businesses as sta .....

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that the appellant has not brought on record any material which may indicate that its cases for earlier years were completed under scrutiny assessments. It may further be mentioned that Smt. Gulab Devi Saruparia, the mother of the Karta of the appellant HUF, for the AY 2013-14 was also engaged in the similar business of trading and manufacturing of PP Woven Sacks and other packing material and on a turnover of ₹ 4,53,06,220/-, she has declared a GP rate of 7.25% which has been enhanced to .....

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in December, 2011 and in the financial year relevant to assessment year 2012-13, the assessee has worked only for four months and twenty days and the G.P. declared was 4.76%. For the year under consideration, the G.P. declared was 5.26%, which is comparably better than the just preceding year s book result. He further submitted that since this was a new business, the some expenses were on higher side in comparison to sister concern. The rent payable for the premises and also the stitching expen .....

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. On the other hand, the ld DR has relied on the orders of the authorities below. 8. The Bench have heard both the sides on this issue. The Bench have also considered the various case laws relied upon and the factual aspect of the case. After considering all these facts, the Bench is of the view that the G.P. rate for the year under consideration was better than immediate preceding year. Further this was a new business started wherein the expenditure on account of rent and the stitching was comp .....

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