TMI Blog2021 (2) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... s as compared to previous year, such results provide a reasonable basis to hold that there should not be any addition in the hands of the assessee company. - Decided in favour of assessee. - ITA No. 134/JP/2020 - - - Dated:- 2-2-2021 - Shri Sandeep Gosian, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri S.L. Poddar (Advocate) For the Revenue : Shri A.S. Nehra (Addl.CIT) ORDER PER SANDEEP GOSIAN, J.M. This appeal by the assessee is directed against the order dated 29.11.2019 of ld. CIT (A)-2, Jaipur for the assessment year 2016-17. The assessee has raised the following grounds of appeal :- 1. That the learned CIT (Appeal) sustain the addition of ₹ 21,99,341.00 on account of Gross Profit as CIT (A)-1, Jaipur applied Gross Profit Ratio 8.5% against Assessee firm recorded 7.99% Gross Profit Ratio without consideration of books results i.e. GP NP of the assessee which are more than previous year. 2. That the appellant have crave permission to add, alter, amend or delete any ground or grounds of appeal on or before the hearing of this appeal. 2. Brief facts of the case are that the assessee is a partnership firm engaged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under appeal of ₹ 434372451/-. The accounts of the partnership firm was maintained as per accounting principles and on the same line as maintained in previous years, which was audited by a qualified chartered accountant as per the provisions of sec. 44AB of the Income Tax Act, 1961. In the audit report there is no adverse observation made by the chartered accountant for the maintenance of books of accounts of the assessee firm. The assessee maintained proper books of accounts and recorded all the transactions made by him on day to day basis. He maintained computerized cash book, bank book, journal ledger. It also maintained proper vouchers for expenses and purchases made. The auditors of the assessee gave clean report after examining the books of accounts and other records of the firm and no qualification was made in their report. At the time of assessment proceedings assessee filed each and every details which required by A.O. Assessee also produced books of accounts and purchase voucher along with expenses vouchers online on e proceeding. Assessee firm also produced list of sundry creditors for labour, material and filed confirmation for other creditors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjusted Profit 22812728 20178199 34722314 Total Turnover 307983890 258056977 434372451 Net profit furnished by A/R vide letter dated 17-12-2018 7.40 7.81 7.99 The above reply clearly shows that the statement of A.O. in the assessment order totally wrong and this is not the reason for rejection of books of accounts u/s 145(3) of the Income Tax Act, act and frame assessment under section 144 of the act. In point no 3.4 to 4 on page no. 4 to 6 of assessment order A.O. said the assessee firm not filed details eg. Creditors for labour and material of ₹ 14,56,79,014/, On the other hand he said in point no. 3.5 that AR of the assessee has submitted a list mentioning the name only of drivers and majdoors to establish the genuineness, creditworthiness or identity in support of his case. In this respect we want to say that the assessee firm is a civil contractor and received civil contract from govt. and govt. department from various place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors, the undersigned is not satisfied about the correctness and completeness of books of accounts of the assessee therefore, the books of accounts maintained by the assessee is rejected u/s 145(3) of I. T. act,1961 and the assessment order u/s 144 of the 1. T. Act, 1961 is to be passed by applying 9% Net profit rate on the total turnover of the assessee at ₹ 43,43,72,451/- against the net profit rate declared by the assessee of 6.11% during the year which is clearly mentioned by the auditor in the audit report in form 3CD. Now we see section 145 and section 144 which reproduced as under:-Method of accounting. 145. (1) Income .of income. Section 145 Method of accounting Section 145(1) said as under Income chargeable under the head Profits and gains of business or profession or Income from other sources shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Sub section 2 of section 145 said that The Central Government may notify in the Official Gazette from time to time income computation and disclosure sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so not cash creditors they were only for involving of labour and material for local purchase as the assessee is civil contractor and purchase material such as sand, grit, lalmitti from local individually suppliers. All the contract receipt of the assessee through banking channel. Assessee not received any payment in cash for its contract receipt during the year of appeal. As we say that assessee employed accounting system regularly as in previous years and assessment also completed u/s 143(3) of the act in same circle which prove our contention that assessee maintain same accounting system which maintained in previous years and assessee also shows its better result during the year under appeal against previous years, which also completed u/s 143(3). Trading result of the assessee/Appellant firm Assessment Year 2014-15 (Rs.) 2015-16 (Rs.) 2016-17 (Rs.) Turnover 307983890 258056977 434372451 Net Profit as per P L a/c before allowing interest paid to partner and remuneration to partner but includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in previous years also. It is regular feature in the assessee's trade that payment received from govt. govt. department in last date of March which deposited in bank in next year, due to this creditors not paid in time. In the previous years A.O. not rejected books of accounts of the assessee for on the basis of outstanding creditors for labour and material. It is also important that the assessee firm shown its better trading result during the year under appeal as against in the previous years which clear from above chart Now we pray to your goodselves. Kindly allow the appeal in Toto. We relied on the order of authorities below. (Jodh-ITAT) 2019 ITL 3374 Income-tax Officer Wd-(1), Jodhpur, Rajasthan vs. M/s Ashok Transport Co. Udau Service Station ( JR-Trib.) 2014 ITL 1351 Deputy Commissioner of Income-tax vs. M/s Balaji Winer Raj Pal Yadav and R C Sharma, JJ. ITA No.08/JP/2003 dated may 30-05-2014 Mangalore Ganesh Beedi Works Versus Commissioner of Income Tax And Another - 2005 (1) TM! 15 - SUPREME Court Commissioner of Income-Tax Versus British Paints India Limited SUPREME Court Commissioner Of Sales-Tax, Madhya Pradesh Versus HM Esufali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the doctrine of consistency would come into play. (339ITR 382 Jagathit Industries Ltd., Del.) Prayer We request to your honour kindly delete the addition made by the A.O. on account of GP/NP of ₹ 12551297.00 and oblige. 6. At the time of hearing of the appeal, the ld. A/R of the assessee submitted that the ld. CIT (A) though admitted that the assessee has declared better results over the last year where NP/GP rate were lower compared to the year under consideration even then has applied the NP rate of 8.5% as against 7.99% declared by the assessee without any basis. The ld. Counsel further placed reliance on the decision of this Tribunal in the assessee s own case for the preceding year i.e. A.Y. 2015-16 in ITA No. 961/JP/2019 dated 26.09.2019 whereby addition was deleted on identical facts. 7. On the other hand, the learned D/R relied on the orders of the lower authorities. 8. We have heard the rival contentions and carefully perused the materials available on record. At the outset, we note that an identical issue was considered by this Bench of the Tribunal in assessee s own case in ITA No. 961/JP/2010 dated 26.09.2019 for the assessment year 2015-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the assessee has a settled past history, in such cases, accepted G.P rate for the past years in assessee s own case has been held by the Rajasthan High Court as proper and reasonable basis for estimation of G.P rate for the current year. In the instant case, the AO has made an adhoc trading addition of ₹ 2 lacs and in the process, has estimated the G.P rate of 16.47% on the declared turnover of the assessee and which has been upheld by the ld CIT(A). There is no basis which has been specified by the AO while making the addition of ₹ 2 lacs and we also find that the assessee s own past history has also not being taken into consideration. Once the books of accounts have been rejected due to non-maintenance of stock register, qualitative records, etc and provisions of section 145(3) have been invoked, the authorities cannot resort to make addition on an adhoc basis to prevent leakage of revenue as so stated by the AO. Only course left with the authorities is to estimate the gross profit rate based on best judgement and the past results of the assessee provides a reasonable basis for such estimation. For the year under consideration, the assessee has declared G.P rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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