TMI Blog2021 (1) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... ossly erred in not crediting the export benefits in the recasted trading account prepared while working out the gross loss. Assessee had earned only gross profit during the year under consideration. It is a fact that assessee had made only export sales during the year and no local sales were made. Export benefits needs to be considered as trading receipt for the purpose of working out the gross profit of the assessee for the year under consideration. We find the GP disclosed by the assessee for the A.Y.2012-13 was 2.92% and GP of A.Y.2011-12 was 3.02%. Hence, there is absolutely not much variation in the gross profit disclosed by the assessee also This is not a fit case for rejection of books of accounts u/s.145(3) of the Act by the ld. AO. We hold that the ld. CIT(A) had duly appreciated all the contentions of the assessee and rightly granted relief to the assessee in the instant case - Decided against revenue. - ITA No.5654/Mum/2017 - - - Dated:- 13-1-2021 - Shri M. Balaganesh, AM And Shri Amarjit Singh, JM For the Assessee : Shri Piyush Chhajed For the Revenue : Shri Rajendra Joshi ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.5654/Mum/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year under consideration, the turnover of the assessee proprietary concern was ₹ 27,66,45,154/- which was totally export sales. The assessee while preparing the financial statements inadvertently mentioned the total sales figure of ₹ 27,66,45,154/- in the column of local sales instead of export sales. In fact the assessee had also credited in her profit and loss account a sum of ₹ 1,65,50,822/- on account of duty draw back and ₹ 82,17,914/- on account of DEPB license, both comprising export benefits. These two incomes go to prove that the entire income was only export income and there was absolutely no local sales earned by the assessee during the year. Based on this mistake committed by the assessee by erroneously showing the export sales in the column of local sales, the ld. AO came to a conclusion that assessee s books are not reliable. 3.1. Similarly, a typographical error took place in Schedule-E of the financial statements wherein balance of scheduled banks were reported at ₹ 43,01,046/- with Bank of India and nil balance with Dena Bank instead of reporting it vice versa. The total bank balance remained to be same but interse between the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried forward as opening stock on 01/04/2011. The assessee pleaded that the valuation of closing stock as on 31/03/2011 amounting to ₹ 2,53,73,818/- has been correctly taken as opening stock as on 01/04/2011. Hence, there was absolutely no difference in the profit figures because of the alleged discrepancy, as only quantity details were wrongly reflected in Annexure E for A.Y.2011-12 and not for the year under consideration. The ld. AO however disregarded the contention of the assessee. 3.5. The ld. AO in view of the aforesaid various discrepancies proceeded to reject the books of accounts u/s.145(3) of the Act and proceeded to estimate the gross profit of assessee @4% of turnover and made an addition of ₹ 1,91,86,326/- in the assessment. The ld. AO also observed that assessee had shown a gross loss of ₹ 1,66,73,642/- based on the re-casted trading account prepared by the ld. AO in page 4 of his assessment order and while preparing this re-casted trading account, the ld. AO did not consider the export benefits as part of trading receipts. It was pleaded that the assessee had only export sales of ₹ 27.66 Crores during the year under consideration and in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3.2011 and opening stock as on 1.4.2011. The AO appears to have made the addition merely on presumption and unfounded beliefs. While he adopted the figure of ₹ 61,87,492/- as the value of opening stock for assessment year 2012-13 and made an addition of ₹ 1,91,86,326/-, he did not change the figure of the closing stock in the earlier year. Similarly, no change has been made in the figures of either opening stock or closing stock for the subsequent assessment year i.e. 2013-14 where assessment under section 143(3) has been made. An examination of the material on record shows that the discrepancies pointed out by the AO are mere typographical errors and have got nothing to do with the accuracy of the books of account. The AO has not pointed out any discrepancy in the books of account but has merely pointed out the typographical errors in the presentation and rejected the books of account on this basis. All the discrepancies pointed out/queries raised by the AO have been clarified by the learned counsel both during the assessment proceedings as well as appellate proceedings. The AO has not pointed out any substantial defect in the books of account which would warrant the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x audit reports for A.Y.2011-12 and 2012-13 of the assessee which are enclosed in the paper book comprising of pages 1-111 filed before us. We find that there is mistake in reflecting the quantity figures in the tax audit report for A.Y.2011-12. However, right quantity details have been duly reflected together with the values thereon for the A.Y.2012-13 and there is absolutely no difference in value between the closing stock as on 31/03/2011 and opening stock as on 01/04/2011. Hence, there is absolutely no impact in the computation of profits as per books and computation of total income as per the Act for the year under consideration. Hence, there cannot be any grievance for the revenue at all in the instant case. Moreover, the ld. AO grossly erred in not crediting the export benefits in the sum of ₹ 2,47,68,736/- in the recasted trading account prepared at page 4 of his assessment order while working out the gross loss. Infact, we find the assessee had earned only gross profit during the year under consideration. It is a fact that assessee had made only export sales of ₹ 27.66 Crores during the year and no local sales were made. We hold that export benefits of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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