TMI Blog2018 (2) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, after rejection of books of accounts only the course of action left with the AO assessee is to estimate the income by applying proper GP or NP rate. We set aside the orders of the authorities below qua this issue and direct the AO to assessee the income of the assessee on the basis of the average gross profit, declared and admitted by the AO or attained finality. The AO to consider the past history of the GP of the assessee for arriving to the average rate of GP. - Decided in favour of assessee for statistical purpose. - ITA No. 197/JP/2016, ITA No. 248/JP/2016 - - - Dated:- 29-1-2018 - SHRI VIJAY PAL RAO, JM SHRI VIKRAM SINGH YADAV, AM Assessee by : Shri S.R. Sharma Shri R.K. Bhatra (C.A.) Revenue by : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding the rejection of books of accounts u/s 145(3) of the Act and sustaining the addition to the extent of 15% of the unverifiable purchases. 4. We have heard ld. AR as well as DR and considered the relevant material on record. The AO noted that the assessee has shown the purchase from some of the parties who are indulged in providing bogus bills without actual delivery of goods. The AO has considered the facts as it came out during the investigation made by the Investigation Wing in case of Shri R.K. Jain who was running M/s Avi Exports, M/s Sun Dian and M/s Vitrag Jewells. After rejecting the books of accounts, the Assessing Officer has made an addition of unverifiable/bogus purchase of ₹ 85,64,509/- from these three parties nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is aggrieved by the impugned order by the ld. CIT(A) whereby the addition made by the AO equivalent to 25% of the unverifiable purchase was restricted by applying the GP addition @ 25.50%. We are of the considered view that once the books of account are rejected by the AO then, the only course of action left with the AO is to assess the income of the assessee on the basis of estimate and best judgment. The Assessing Officer after rejection of books of account has further made addition of 25% of tainted sales to the books result which is not permissible when the AO resorted invoke the provisions of section 145(3) of the Act. Thus, this action of the AO is contrary to the decision of rejecting the books of accounts. Accordingly, we do concur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) in para 2.20 and 2.30 as under:- 2.20 Hence, there are certain concerns for which Revenue got evidence in the form of statement recorded in respect of such parties, opening balance is ₹ 37,06,175/- while the closing balance is ₹ 42,81,496/-. It means that there is an accretion of amount of ₹ 5.75/- lacs. It means that to this extent, accretion in purchase is without supporting the correct bills. Of course, total openting balance of all parties is ₹ 1,15,43,782/- and the closing balance is ₹ 1,33,36,193/-. However, looking to the accretion in the closing balance of the concerns for which Revenue has material, the addition confirmed by the ld. CIT(A) is reasonable . 2.30 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 1,75,26,586 shown by the assessee in its balance-sheet as trade creditors, so it was not relevant for us to consider as to whether the purchases made by the assessee were genuine or not or to whether the assessee has inflated those purchases or not. It is also not material to consider whether the GRs from sale-tax department were verified or not, so, the CIT(A) on considering these points was not justified in deleting the impugned addition without discussing as to whether the liability of trade creditors shown by the assessee in the absence of furnishing complete addresses of trade creditors/consignors and the payment vouchers was genuine or not. While evaluating the material collected by the Revenue on the touch stone on hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lts u/s 145(3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgment instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee s own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the ld. CIT(A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substance or merits. Accordingly, in view of the above facts and circumstances of the case and the decision of this Tribunal in case of ACIT vs. M/s Allied Gems Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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