TMI Blog2020 (1) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Hon ble Supreme Court in the case of NTPC Ltd Vs.CIT [ 1996 (12) TMI 7 - SUPREME COURT]. Thus we admit the additional ground of appeal raised by the assessee and proceed to adjudicate the same. Rejection of books of accounts - AO adopting GP @40% of the turnover in place of 37% as worked out by the appellant - HELD THAT:- Reasons basing on which the AO for rejected the books of accounts are not sufficient enough and cogent to disregard the books of accounts. Books of accounts of the assessee are not liable to be rejected as per the provisions of section 145 of the Act. Accordingly, we conclude that once the books of accounts of the assessee are not liable to be rejected then its book profit should be accepted in the given facts and circumstances. Accordingly, in the backdrop of the aforesaid discussion and precedent, we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Disallowance of depreciation claim - addition on the basis of statement recorded during the survey proceeding u/s. 133A - HELD THAT:- As decided in own case [ 2020 (1) TMI 838 - ITAT AH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO found that there are certain expenses amounting to ₹ 49,72,106/- incurred towards the conference and seminar expenses, guest entertainment expenses, travelling expenses, postage and courier expenses etc which were not eligible for deduction under section 35D of the Act. Accordingly, the AO disallowed the proportionate expenses of _9,94,421/- being 1/5th of ₹ 49,72,106/- which was claimed in the relevant year i.e. AY 2000-01 and added to the total income of the assessee. 6. The AO for the under consideration following the order for the assessment year 2000-01 has also disallowed the similar expenses of _9,94,421/- and added to the total income of the assessee. 7. However, the AO further found that the assessee has claimed an expense of ₹ 2,21,19,0177/- whereas it should have claimed a sum of ₹ 2,12,76,316/- as claimed in the earlier assessment years. Accordingly, the AO found that there was an excess claim of _9,13,861/- by the assessee. Thus, the AO disallowed the same and added to the total income of the assessee. 8. Finally the AO disallowed the sum of ₹ 19,08,282.00 ( 9,94,421.00 plus 9,13,816. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned AR prayed before us for dismissing the impugned appeal of the Revenue as the same has already been disposed of by the ITAT vide order dated 06.01.2012. 18. On the contrary, the learned DR conceded to the argument made by the learned AR for the assessee. 19. In view of the above, we hold that the impugned appeal filed by the Revenue has wrongly been listed for hearing. Accordingly, we dismiss the same. Hence the appeal filed by the Revenue is dismissed. 20. In the result, the appeal filed by the Revenue is disposed of as indicated above. Coming to ITA No. 217/Ahd/2014 A.Y. 2006-07(Assessee s Appeal):- 21. The assessee has raised the following ground of appeal:- 1. Ld. CIT(A) erred in law and on facts in confirming addition made by AO of ₹ 1,75,39,681/- rejecting books of account invoking section 145 of the Act and adopting GP @40% of the turnover in place of 37% as worked out by the appellant. Ld. CIT(A) failed to appreciate detailed submissions, evidences and supporting place on record to substantiate fall in GP by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the department have a right to file an appeal/cross objections before the Tribunal. There is no reason why the. Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent auditor, internal auditor and tax auditor and all the details were examined but there was no adverse comment by them. The assessee in support of its contention filed the copy of quantitative details of opening closing inventory, raw material purchased consumed, finished goods produced and sales made during the year under consideration. It also submitted monthly sales and purchase details along with the name and address of debtors and creditors. 29. The AO issued notices under section 136(6) of the Act to four different suppliers/creditors but received no response from three suppliers. The assessee has made aggregate purchases of ₹ 51,53,778/- only from three parties. The AO in absence of any reply in response to the notice issued u/s 136(6) of the Act held the same as unexplained expenses u/s 69C of the Act and added the same to the total income of the assessee. 30. The AO, on account of non response of notice from suppliers as discussed above, further held that the assessee has inflated the purchases and therefore the books of accounts maintained by it are not reliable and accurate. Accordingly the AO rejected the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has thus been found to be fairly reasonable and does not requires any interference at his stage. Consequently the addition of ₹ 1,75,39,681/- made on account of low GP ratio is confirmed and the ground of appeal No. 3 is therefore dismissed. Being aggrieved by the order of the ld. CIT-A, the assessee is in appeal before us. 34. The learned AR before us submitted that all the details were furnished before the authorities below and there was no defect pointed out by them. As such, the non-response from the supplier and decline in GP cannot be the ground for the rejection of the books of accounts. 35. On the other hand, the learned DR vehemently supported the order of authorities below. 36. We have heard the rival contentions and gone through the facts and circumstances of the case, including the materials available on record. As per section 145 of the Act, the AO is empowered to reject the books of accounts of the assessee and make best judgment assessment in the manner as specified under section 144 of the Act if he is not inter-alia satisfied with the completeness or correctness of the books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below. Lower gross profit as compared to earlier year cannot be the ground to reject the books of accounts. In this regard we take the support from the case of Malani Ramjivan Jagannath Vs Asstt. CIT reported 316 ITR 120 where the Hon ble Rajasthan High Court held as detailed under: The Tribunal committed basic error in not appreciating the reasoning given by the Commissioner (Appeals). It was trite to say that in the facts and circumstances of the instant case, account books were maintained as they were ordinarily maintained year after years and which were found to yield a fair result. Mere deviation in gross profit rate cannot be a ground for rejecting books of account and entering realm of estimate and guesswork. Lower gross profit rate shown in the books of account during current year and fall in gross profit rate was justified and also admitted by the Assessing Officer as well as Commissioner (Appeals) as well as the Tribunal. Therefore, fall in gross profit rate lost its significance. Having accepted the reason for fall in gross profit rate, namely, stiff competition in market and also that huge loss caused in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... render rejection of account books on the ground that the accounts are not complete or correct from which the correct profit cannot be deduced. Whether presence or absence of stock register is material or not, would depend upon the type of the business. It is true that absence of stock register or cash memos in a given situation may not per se lead to an inference that accounts are false or incomplete. However, where a stock register, cash memos, etc., coupled with other factors like vouchers in support of the expenses and purchases made are not forthcoming and the profits are low, it may give rise to a legitimate inference that all is not well with the books and the same cannot be relied upon to assess the income, profits or gains of an assessee. In such a situation the authorities would be justified to reject the account books under section 145(3) and to make the assessment in the manner contemplated in these provisions. We also find support and guidance from the order of ITAT Bench in the case of Haridas Parikh Vs. ITO reported in 113 TTJ 274 wherein it was held as under: Unless the Assessing Officer is able to point out certain transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce up to ₹ 3,67,46,232/- only. Being aggrieved, the assessee is in appeal before us. 44. At outset, we note that the Hon ble ITAT in second round of appeal related to A.Y 2002-03 to 2005-06 allowed the claim of the assessee in ITA Nos. 1140, 1342 to 1344/AHD/2015 in its own case vide order dated 25.11.2019 by holding as under: 8. We have gone through the relevant record and impugned order. Now question before us is that whether on the basis of survey conducted by the Income Tax Department claim of the assessee for depreciation should be allowed or not. After detailed deliberations and both the parties we heard in detail in support of its contention, Ld. A.R. submitted all the details with regard to purchase of machines. On the other hand, revenue contention was that machines were not purchased on the given date and payment was made through journal entry. When we specifically asked about the payment made in order to purchase machinery. Ld. A.R. shown us the payment detail and they were made through banking channels and relevant details of the said payment were shown to us and list of suppliers with invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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