TMI Blog2020 (2) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in trading and manufacturing activities. Detailed chart of 'Receipts' 'Expenses' as placed at PB page No.34 35, no specific discrepancy what-so-ever could be pointed out in respect of such receipts and expenses. Set aside both the orders of the lower authorities and the matter is restored back to the A.O. to examine afresh in the light of the fact that the observation of internal and statutory auditor was removed by the assessee subsequently as stated by the ld AR. A.O. should also keep in the mind that the assessee being banking company and not a trading or manufacturing concerned so as to estimate the GP or NP on its sales. The A.O. is to decide the issue afresh after giving due and effective opportunity of hearing to the assessee. - ITA No. 109/JP/2019, ITA No. 162/JP/2019 - - - Dated:- 21-2-2020 - Shri Ramesh C Sharma, Accountant Member For the Assessee : Shri K.L. Moolchandani (CA) For the Revenue : Ms. Chanchal Meena (JCIT) ORDER PER: R.C. SHARMA, A.M. These are the appeal and cross appeal filed by the assessee and revenue against the order of ld. CIT(A)-1, Jodhpur (camp at Jaipur) dated 27/11/2018 for the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft were not present. (g) Further, as per 27(a) of the Report, the auditor 1 remarked that in case of FDR interest there were many irregularities as far as Complying with the provisions of Chapter XVII-B regarding deduction of tax at source and regarding the payment thereof to the credit of the Central Government was concerned. But due to lack information, the auditor could not furnish the details. As is evident from above, the auditor of the assessee had himself based his audit on the Statutory Audit Report prepared by Gupta Saxena Acharya Company, Jaipur. On a perusal of Statutory Audit Report, the Following observations were made: i. As per Column 5 of Audit Report Part 'B' 2008-09, the balance $ reconciliation of the accounts of Head Office and branches had not been done since years. ii. As per paragraph 15.1 of the Audit Report, the assessee has not followed accounting principles as prescribed by RBI, NABARD laws, etc. Books of account were not completed within prescribed time limits. iii. As per paragraph 15.7 of the Audit Report, there were (irregularities in the maintenance of day book and vouchers. iv. As per paragraph 15.8.3 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, I hereby restricted the NP rate of the appellant to the 3.66% i.e. average of the NP rate as declared by the appellant during the A.Ys, 2007-08 and 2009-10. In this regard, the appellant gets relief accordingly ground Nos. 1, 2, 4 and 6 are treated as partly allowed. 4. Against the above order of the ld. CIT(A), both the assessee and the revenue are in appeals before the ITAT. 5. It was contended by the ld AR of the assessee that as in the past, during this year also, two 'Audits' were undertaken in normal routine course; one by 'Internal Audit' and second 'Statutory Audit' by an approved Auditor; pointing out the routine and procedural lapses to be met out in updating the books of the Branches and Head-Office of the Bank. Thus such `Audits' were routine exercise to monitor and supervise the proper functioning of the Bank. Some of the procedure 'lapses' and 'defects' as pointed out in the year also continued to be same, so there is no valid reason for the AO to deviate from the past history of the case. The only reason assigned by AO for making this addition was that the assessee was non-cooperative in the assessment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny income effect. Having considered such general nature of objections, in appeal, the Id CIT (A) had reduced such NP rate to 3.66% (from 11.03%) and allowed this ground partly. 7. It was the argument of the ld AR that such 'Audit Objections' were of routine and general nature having no bearing on the income part of the Bank. Finally, all such objections were successfully met out and settled as per 'Minutes' drawn in 2013. The profit results of the Bank shown originally remained same as per certificate placed in the PB at page No. I). In the circumstances, the Authorities Below were not justified in rejecting the book results u/s 145(3) of the Act and determining the income of the Bank by estimating NP rate (11.03% by the AO 3.33% by the 1d. CIT (A) in absence of any valid reason. 8. On the other hand, the ld DR has relied on the orders of the lower authorities and contended that the ld. CIT(A) was not justified in reducing N.P. rate from 11.03% to 3.66% without substantiating the same. 9. I have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the assessee is a 'Banking I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in no case can he employ for part of the transactions or events relating to one source of income of different system of accounting. There cannot be piecemeal method of accounting in respect of the same business or the same source of income or expenditure. Therefore, considering the factual and legal position as discussed above. the AO's action of invoking, section 145(3) of the Act is upheld. The appellant fails on this issue. 10. It is clear from the finding of the ld. CIT(A) that the ld. CIT (A) had turned down this ground 'summarily' under misconceived belief that the 'Assessee Bank' was a 'Trading or Manufacturing Concern' and had uphold the findings of the AO while relying upon certain judicial citations of Hon ble Supreme Court Gujarat High Court, which had no bearing on the facts of the present case. Therefore, I am of the considered view that the 'Bank' is not a trading or manufacturing concern so it was not required to maintain any 'Stock Register' as opined by the ld. CIT (A). The Receipts and Advances as made during the banking operations are duly accounted for and are vouched and verifiable. In the circumstances, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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