TMI Blog2020 (5) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of last three assessment years we find that even where the books of accounts have been rejected, there is no basis for making trading addition in the hands of the assessee. See GOTAN LIME KHANIJ UDHYOG. [ 2001 (7) TMI 19 - RAJASTHAN HIGH COURT]. - Decided in favour of assessee. - ITA No. 1126/JP/2018 - - - Dated:- 15-4-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Rajni Kant Batra (C.A) And Shri S R Sharma (C.A) For the Revenue : Shri K C Gupta (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of the ld. CIT(A)-I, Jaipur dated 31.07.2018 for the assessment year 2009- 10 wherein the assessee has taken the following grounds of appeal:- 1. That on the facts and in the circumstances of the case the CIT(A) is wrong, unjust and has erred in law in confirming rejection of books of accounts of the appellant by the assessing officer U/s 145(3) of the Act on the ground that the purchase to the extent of ₹ 2,11,15,458/- are allegedly not genuine and not verifiable. 2. That the Ld. CIT(A) is further wrong and has erred in law in directing application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tudded jewellery, the assessee has shown GP rate of 20% which is better in comparison to preceding assessment years as can be seen from the following details:- A.Y Turnover Gross Profit Gross profit rate 2006-07 2,97,91,069 57,34,493 19.25% 2007-08 1,88,60,887 35,43,957 18.79% 2008-09 1,88,54,584 25,33,190 18.28% It was further submitted that the said facts were duly taking into consideration during the course of original assessment proceedings as can be seen from the original assessment order passed u/s 143(3) dated 17.03.2011 wherein the AO has given a finding that trading results are progressive in terms of total sales as well as declared GP. It was accordingly submitted that there is no basis in applying the arbitrary GP rate of 19.25% as against declared GP rate and the addition so confirmed by the ld. CIT(A) should be deleted. 4. Per contra, the ld. DR submitted that the present reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of semi precious stone and studded jewellery, he has disclosed a gross profit rate of 20% which is better than the average gross profit rate of last three assessment years, in the facts and circumstances of the present case, we find that even where the books of accounts have been rejected, there is no basis for making trading addition in the hands of the assessee. In this regard, reference can be drawn to the decision of Hon ble of Rajasthan High Court in case of CIT vs Gotan Lime Khanij Udhyog (2002) 256 ITR 243 wherein it was held as under: 3. We have perused the statement of case and the finding recorded by the Tribunal in the light of observations made in the statement of case and heard the learned counsel. Section 145 as it stood at the relevant time, reads as under : 145. Method of accounting.-(1) Income chargeable under the head Profits and gains of business or profession or Income from other sources shall be computed in accordance with the method of accounting regularly employed by the assessee : Provided that in any case where the accounts are correct and complete to the satisfaction of the Assessing Officer but the method employed is such that, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts made by him employing any other method of accounting. 5. Be that as it may, the provision which was in force in the accounting period relevant to assessment year in question envisaged that where the accounts are correct and complete to the satisfaction of the Assessing Officer but the method employed is such that in the opinion of the Assessing Officer, the income cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Assessing Officer may determine. It also envisaged that where no method of accounting is regularly employed by the assessee, any income by way of interest on securities shall be chargeable to tax as the income of the previous year in which such interest is due to the assessee, that is to say, on accrual basis. Thus, sub-section (1) deals with method of accounting employed by the assessee with reference to computing income chargeable under the head Profits and gains of business or profession or Income from other sources on the basis of method of accounting employed by the assessee. It does not deal with correctness or completeness of accounts, but with any defect in method of account. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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