TMI Blog2012 (12) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... n made may be deleted. 4. That even otherwise the authorities did not appreciate that all the purchases sales are vouched and they are duly accounted for in the books of accounts. In view of these circumstances, no addition is at all called for and the addition made may be deleted. 5. That the authorities below did not appreciate that there was no suppression of income and the material purchased by the assessee was used for the construction and the authorities below did not appreciate that the goods were received much earlier and the bills received later on. The authorities below did not appreciate that all the purchases and sales are duly vouched and they are duly accounted for in the books of accounts and as such the addition made may be deleted. 6. That the addition has been made without affording any reasonable opportunity of being heard and material collected at the back of the assessee cannot be utilized against the assessee and the addition made by the AO confirmed by the Ld. CIT(A) is liable to be deleted. 7. That the addition has been made purely on the basis of conjectures, surmises and supposition and the addition made may be deleted. 2. The brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount, it is clear that on the left-hand side, the appellant has debited all expenses including the alleged purchases, as discussed above, whereas on the right-hand side of this income expenditure account, there are only four items i.e. contract income, miscellaneous income, disclosure and figure of closing stock. The figure of closing stock is ₹ 43.88 lacs only and no remaining balance out of these alleged purchases is being reflected on this side either under the head of closing stock or work in progress or figure of sales or figure of disclosure meaning thereby that it is a crystal clear-curt case of not showing these alleged purchases remained unconsumed either in the figure of closing stock or work in progress. It is rather surprising that purchases are shown on the debit side of income expenditure account but the consequent figure of consumption of the same or sale out of the same or it remaining in closing stock or work in progress is not shown. Hence, logically one has to find out as to why this figure of alleged purchases be not added in the figure of appellant s income straight-away. As such, question of application of net GP rate thereon does not arise. What i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,26,64,682/- on a/c of inflated purchases having already been made separately in this case] and same addition is hereby confirmed being appropriate and justified in the eyes of law. This disposes of grounds of appeal No. 5 to 11 against the appellant. 4. The Ld. counsel for the assessee, Sh. P.N. Arora, Advocate, invited our attention and argued that the main objection of the AO and the ld. CIT(A) in the present appeal of the assessee is that purchases which have been made from 26.03.2008 to 31.03.2008 to the extent of ₹ 1,69,563,135/- should have been declared as closing stock or work in progress, but the assessee has declared only ₹ 43,88,453/- as closing stock. Therefore, difference of ₹ 1,26,64,682/- being less inventory or work in progress declared by the assessee has been suppressed by the assessee and the same was added to the income of the assessee. At the outset, the ld. counsel for the assessee, Sh. P.N. Arora, invited our attention that the difference of ₹ 1,69,53,135/- and ₹ 43,88,453/- is ₹ 1,25,64,682/- and not ₹ 1,26,64,682/- and therefore, this difference of addition of income straightway should be deleted being ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the net income at ₹ 2,22,15,929/- as against NP declared by the assessee at ₹ 1,38,27,715/- which should have given rise to an addition of ₹ 83,88,214/- . In fact, as argued earlier, Mr. P.N.Arora, ld. counsel for the assessee further argued that since each and every explanation to the query of the AO and the ld. CIT(A) and the AO in the remand proceedings were submitted and which are part of the record and therefore, provisions of section 145(3) of the Act, cannot be made applicable. In case, provisions of section 145(3) are made applicable then no specific addition can be made as has been done by the AO in the present case. The AO chose to make addition on account of less declaration of the closing stock than application of NP rate since the said view formed by the AO was more beneficial to the revenue. This approach of the AO is against the settled principles of law. The Ld. counsel for the assessee, accordingly relied upon the decision of the ITAT Amritsar Bench in the case of Amarjit Singh Bajwa, Contractors in ITA No. 371(Asr)/2010, order dated 26.07.2012 where the net profit rate was applied when irregularities in the maintenance of books of account were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 201400 03/10/2007 8 201125 10/10/2007 9 252125 12/10/2007 10 96400 25/01/2008 11 395250 13/02/2008 12 313000 07/03/2008 13 181750 10/03/2009 14 150000 21/03/2008 15 210000 For Amar Deep Singh Sd/- Authorised Signatory PAN:BEPPS7516R Ward 3(1), Asr GURMEET KAUR Fleet Owners 97-A, Partap Nagar, G.T.Road, Amritsar. Dated:18/01/2012 CERTIFICATE Certified that following materials were supplied to The Mattewal Coop. L/C Society Limited much earlier before the issuing of the bills and also certified that the above said material supplied before date of issue the bills for the financial year 2007-09. For Gumeet Kaur Sd/- Authorised Signatory PAN:AQQPK9818Q Ward 3(1), Asr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee without confronting the assessee is not information in view of the decision of the Hon ble Supreme Court in the case of Kishinchand Chelaram (supra). Therefore, the AO is not justified in making the addition on account of less disclosure of closing stock to the tune of ₹ 1,26,64,682/- for which the assessee has submitted the explanation before the ld. CIT(A) and the AO in the remand proceedings. Accordingly, the order of the Ld. CIT(A) is reversed and AO is directed to delete the addition of ₹ 1,26,64,682/-. 10.2. As regards invoking the provisions of section 145(3) of the Act, the AO has given the show cause notice for invoking the provisions of section 145(3) of the Act and has worked out the addition at ₹ 83,88,214/- if a net profit of 8% is applied on the gross contract receipts declared by the assessee. In the first instance, since the AO has pointed out certain other mistakes like assessee has not produced labour register etc; therefore, certainly there are irregularities in the books of account. Though the AO has not ultimately taken cognizance of the estimation of income but certainly there are deficiencies in the books of account and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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