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Bharti Malpani Versus I.T.O. Ward 1 (2) , Jaipur

2018 (1) TMI 540 - ITAT JAIPUR

Rejection of books of account and trading addition - Held that:- It is not in dispute that this Tribunal in assessee’s own case for the A.Y. 2006-07 has upheld the rejection of books of account on the similar defects found by the Assessing Officer in the books of account, therefore, following the earlier order of this Tribunal in assessee’s own case for the A.Y. 2008-09 and 2009-10, the action of the Assessing Officer in rejecting the books result is upheld. - As regard the G.P. rate applied .....

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ble basis for adopting the G.P. for the current year. Accordingly, we set aside this issue to the record of the Assessing Officer for computing the average G.P. of past years to be adopted for the year under consideration to estimate the income of the assessee. - Addition on account of interest charged from the related parties @ 6% as against the interest paid by the assessee @ 12% - assessee has given loan to relatives and charged 6% interest as against the interest paid by the assessee on .....

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efore, to the extent of loan given to that person, no disallowance is called for. All these facts and contentions were not properly examined by the authorities below, therefore, this issue requires a proper verification and afresh adjudication at the level of the Assessing Officer. - ITA No. 336/JP/2015 And ITA No. 265/JP/2016 - Dated:- 8-1-2018 - SHRI VIJAY PAL RAO, JM AND DR. ARJUN LAL SAINI, AM For The Assessee : Shri Bimal Chopra (CA) For The Revenue : Shri P.P. Meena (JCIT) ORDER PER: VIJAY .....

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r possible nor needed as details are available in the books of account. 2. That the Td. CIT (Appeals) has erred in law and on facts in upholding Gross Profit Rate of 17% as against 15.36% declared even though the turnover has been accepted and ignoring our submissions including that turnover has increased by three times and predecessor Ld CIT(A) applied G.P. Rate of 14% for AY 2009- 10. 3. That the Ld. CIT(Appeals) has erred in law and on facts in confirming the addition of ₹ 15,27,073 on .....

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ly members for their business and ignoring the availability of capital and has not appreciated the real income theory. 2. Grounds No. 1 and 2 of the assessee s appeal are regarding rejection of books of account and trading addition made by the Assessing Officer and confirmed by the ld. CIT(A). The assessee is carrying on business of export of silver articles and semi precious stones under the trade name M/s Bharti Exports. During the course of assessment proceedings, the Assessing Officer noted .....

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he provisions of Section 145(3) of the Income Tax Act, 1961 (in short the Act) and rejected the book result of the assessee. The Assessing Officer then estimated the income of the assessee by applying G.P. rate of 17% on the turnover. 3. On appeal, the ld. CIT(A) has upheld the action of the Assessing Officer of rejection of books of account as well as the G.P. rate @ 17% applied by the Assessing Officer. 4. Before us, the ld AR of the assessee has submitted that the entire sale of the assessee .....

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has referred to the past history of the assessee declaring the G.P. rate and therefore, submitted that the Tribunal for the A.Y. 2006- 07 applied the average G.P. of the past years whereas for the year under consideration, the A.O. has not applied such criteria. 5. On the other hand, the ld DR has relied on the orders of the authorities below. He has further submitted that in the A.Y. 2010-11, the assessee has declared G.P. @ 10.49% whereas the Assessing Officer applied G.P. @ 17%, which was not .....

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jection of books of account on the similar defects found by the Assessing Officer in the books of account, therefore, following the earlier order of this Tribunal in assessee s own case for the A.Y. 2008-09 and 2009-10, the action of the Assessing Officer in rejecting the books result is upheld. 6.1 As regard the G.P. rate applied by the Assessing Officer @ 17% as against the G.P. rate declared by the assessee at 15.36%, there is no dispute that after rejection of books of account, the income of .....

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nt that while estimating the income after rejecting the books of account, the average G.P. of the past years, which has attained the finality or accepted by the revenue would be a proper and reasonable basis for adopting the G.P. for the current year. Accordingly, we set aside this issue to the record of the Assessing Officer for computing the average G.P. of past years to be adopted for the year under consideration to estimate the income of the assessee. 7. Grounds No. 3 and 4 of the assessee s .....

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ing Officer has made this addition by assuming wrong facts. He has pointed out that the assessee has charged interest @ 12% from the some of the related parties which has not been taken into consideration either by the Assessing Officer or by the ld. CIT(A). The ld AR has further contended that the financial position of the related persons were not good and even the recovery of principal was doubtful hence, on commercial expediency concessional interest was paid. Further it was submitted that th .....

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respect. The ld AR has further submitted that when the recovery of loan amount itself is doubtful from these persons due to their poor financial condition then the interest charged from these persons is based on the concept of real income. 9. On the other hand, the ld DR has relied on the orders of the authorities below and submitted that there is no dispute that the assessee has charged interest from related parties @ 6% whereas the assessee has paid interest @ 12%, therefore, the proportionat .....

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to short charging of interest. Further the assessee has pointed out before us that out of five debtors to whom the advance was given. The assessee charged the interest @ 12% from one Shri Rahul Bhandari and therefore, to the extent of loan given to that person, no disallowance is called for. All these facts and contentions were not properly examined by the authorities below, therefore, this issue requires a proper verification and afresh adjudication at the level of the Assessing Officer. Accor .....

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assessment order is invalid in law. 2. That the Ld. CIT (Appeals) has erred in law and facts in upholding the rejection of books of account due to non maintenance of stock and fall in G.P. ratio without considering the fact that maintenance of stock register was not feasible, all the components of trading account are verifiable and fall in G.P. Rate explained as there were major sales to Export parties including sale of 85% around to one party. 3. That the Ld. CIT (Appeals) has erred in law and .....

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