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TMI Blog2020 (7) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the trading addition of Rs. 2,59,620/- out of trading addition of Rs. 5,18,728/- made by the ld. AO." 2. In Ground No. 1, the assessee has challenged the rejection of books of accounts u/s 145(3) of the Act. During the course of hearing, the ld. AR submitted that assessee is a liquor contractor and doing the business at a very remote area of Roopwas Tehsil of Bharatpur District. The assessee was new in this line of business and it was the first year of his business and he did not have any liquor business experience. Being unexperience in the line and without having the required education, the profitability was very low, though he earned good cash profits. The gross profit and net profit shown are actual, correct and true profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Excise Department. The purchases of liquor are made from the State Govt. Deptt. and the prices are also fixed by the State Govt. Further, all the purchase bills and ledger accounts were produced before the AO in the course of assessment proceedings and no single defect had been pointed out by him. All the cases relied upon by the Ld AO are very old and are having no relevance with the liquor business. Hence keeping in view of the above submissions, the ld.AO erred in rejecting the books of accounts of the assessee u/s 145(3). It was further submitted that though this ground was taken before the ld CIT(A) and written submissions were filed, however, the ld CIT(A) has not adjudicated this ground of appeal. 3. Per contra, the ld. DR sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Deepak Kumar Sharma. Hence, the AO has arbitrarily applied G.P. rate of 10% ignoring the fact that the assessee is new one in the line of the liquor business and Sh. Deepak Sharma is a very experienced person in the field. Further, reliance was placed on the Co-ordinate Bench decision in case of Sh. Pratap Singh Tanwar vs. ITO (2017) 59 ITR (Trib) 594 wherein the Tribunal has confirmed the GP rate of 7% by the ld. CIT(A) wherein the assessee is engaged in the similar line of business. Further, reliance was placed in case of Sh. Abhishek Gupta vs. ITO, Ward-04, Bharatpur vide order dated 11.12.2018 for A.Y 2016-17 wherein the AO has made a lump sum disallowance of Rs. 50,000/- u/s 37(1) of the Act and the G.P rate of 3.36 % on turnover of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee be dismissed. 6. We have heard the rival submissions and perused the material available on record. Firstly, regarding the rejection of books of accounts, we refer to relevant findings of the AO which reads as under: "During the year under consideration, the assessee has shown gross profit of Rs, 47,69,239/- on total turnover of Rs. 5,28,79,672/- which gives GP @9.02 %. During the course of assessment proceedings the AR of the assessee was asked to produce all the books of account maintained by the assessee in support of the above result shown by the assessee. In compliance, the A/R of the assessee attended the assessment proceedings and produced books of account consisting of Cashbook, Ledger, etc. which were examined on test check ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 145 has been held justified in the case reported at 11 ITR 923 (Orissa), 114 ITR (Bom) 38 ITR 579 (SC). The A/R of the assessee admitted to have not maintained any day- to - day Stock Register, Stock Register, Sales vouchers, Expenses vouchers, the Expenses claimed have been booked on the basis of self made vouchers and sales are not verifiable. Since, the assessee has not properly maintained the Stock Register, Sales Vouchers and Vouchers for expenses shown in trading and P&L a/c, the books of account maintained by the assessee are not reliable. As per order sheet entry dated 14.11.2017 the AR of the assessee was asked that proper books of account were not maintained and why not your books of account will be rejected u/s 145(3). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tail sale of liquor however, at the same time, the assessee cannot plead non-maintenance of stock register. Infact, where the assessee plead that the purchases are verifiable, then what stops him from producing the records of such purchases and its linkage with the sales made during the year out of such purchases. Further, being the first year of operation cannot be a ground for non-maintenance of proper books of accounts. Therefore, in the entirety of facts and circumstances of the case, we uphold the rejection of books of accounts under section 145(3) of the Act and the ground of appeal so taken is rejected. 8. Once the books of accounts are rejected, the AO is required to estimate the gross profit in the hands of the assessee and for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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