TMI Blog2017 (2) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... that the books did not disclose true result of the assessee. The Ld. CIT (Appeals), we find, correctly held that no specific defect has been pointed out by the Assessing Officer by bringing on record any adverse material. Further, undisputedly, the books of account of the assessee were duly audited and there is no finding to the effect that the assessee had inflated the cost of raw material or cost of processing or that he had made sales outside the books or that the sale price were suppressed. The assumption of the Assessing Officer was clearly therefore sans documentary proof. The Ld. CIT (Appeals) has also given finding of fact that the gross profit rate shown by the assessee is progressive having increased from 12.48% in the preceding year to 14.30% in the year under consideration. In view of the same, we agree with the Ld. CIT (Appeals) that there is no reason at all to reject the books of account of the assessee and estimate the gross profit. - Decided against revenue. - ITA No.664/Chd/2016 - - - Dated:- 8-2-2017 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For the Appellant : Shri Sushil Kumar, CIT DR For the Respondent : S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case. The basic issue involves rejection of books of accounts of the appellant and thereafter application GP rate of 30% based on the results shown by the other assessees who are also said to be in similar business. A perusal of the assessment order shows that the appellant had indeed furnished quantitative detail of the stock, purchases, sales and closing stock. The books of account were rejected on the ground that the same information has not been furnished itemwise as demanded by the AO. The appellant submitted that the purchases were made on the basis of weight which are confirmed from the purchase bills. The photocopies of the purchase bills of gold ornaments, silver ornaments and retail purchases of goods were submitted. It was argued that it was not possible to give itemwise details of bangles, necklaces, ear rings, rings, bracelets etc. these being large in variety and number of sizes etc. The AO rejected the books of account also on the ground of non mention of full description of items sold and purchased in the bills though the weight was mentioned and for non maintenance of stock item wise. No specific defect was pointed out by the AO by bringing on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these cases are distinguishable on facts and hence the ratio laid down therein cannot be applied in the instant case. Further, the unilateral application of the GP rate in toto shown by some other firms said to be in similar line of business is also fallacious. The AO cannot omit to give due opportunity to the appellant to furnish his rebuttal in this regard. There may be distinguishing factors such location of the business, range of goods traded, type of the clientele, volume of sales and efficiency of the managing personnel etc. which impact the gross profit rate. Thus, no valid comparison is possible in these circumstances. Therefore, I am of the opinion that the books of accounts have wrongly been rejected based on convoluted and theoretical arguments without bringing on record any material discrepancy. The decision of Hon'ble Jurisdictional Punjab Haryana High Court in the case of CIT Karnal Vs. Om Overseas (2009) 315 ITR 185 (Punjab Haryana High Court) is fully applicable ,wherein the Hon'ble High Court has held that in the absence of any illegality and perversity in the finding of fact arrived at by the CIT(A) and the Tribunal that the assessee's books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical to that in the present case, where the books of accounts of the assessee, a jeweler, were rejected for identical reasons as stated in the assessee s case being non-maintenance of itemwise detail of jewellery purchased and sold and stock of the same as also incorrect method of valuation of stock adopted being WAC as against FIFO adopted by the Assessing Officer. The Hon'ble I.T.A.T., in that case, after relying on the order of the I.T.A.T., Chandigarh Bench in the case of Jagdish Chand (supra) had held that there was no infirmity in the order of the CIT (Appeals) in deleting the addition made. The relevant finding of the I.T.A.T. are reproduced hereunder : 6. The learned counsel for the assessee placed before us a copy of the order of the I.T.A.T., Chandigarh Bench in the case of Jagdish Chand (supra) stating that the facts of the present case are identical to the facts of that case. Therefore, the learned CIT (Appeals) was right in deleting the addition. After perusing the order of the learned CIT (Appeals), we see that relevant findings are recorded at pages 4.5 and 4.6 of his order, which read as under : 4.5 I have considered the submissions. In the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stently followed. Secondly, the reason for variance of net profit vis a vis the case of M/s Madan Lal is duly explained by the appellant which is not rebutted by the A.O Further there is no case of any discrepancy in the purchase or sale account. Thirdly, the A.O. in this case has only revalued the stock by adopting a higher figure than the rate disclosed by the appellant on the assumption that only old jewellery has been sold first and fresh jewellery has remained in stock until the old jewellery is exhausted. He has not disputed the quantity of stock or purchase/sale at any point. Thus the stock in weight has been accepted by the A.O. The presumption that the jeweller has kept on purchasing jewellery in the years but have not sold till the old jewellery is exhausted is a mere presumption without any evidence on record. The only contention of the A.O. is that in place of WAC method FIFO method should be adopted. As regards cash sales, in the case of R.B.Jessaram Fatehchand Vs. CIT 75 ITR 33(Bom) ,it is held that non-inclusion of addresses of customers in respect of cash transaction can not be basis for rejection of Books of Account. The fixation of an arbitrary rate by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fixation of arbitrary rate by the Assessing Officer for the stones/diamond without any evidence was also held to be incorrect. The I.T.A.T. held that in view of the nature of business carried out by the assessee and the trading of items as per customer s preference the FIFO method could not be applied as suggested by the Assessing Officer. The Hon'ble I.T.A.T., therefore, held that the rejection of books of account was incorrect and addition made on account of estimation of gross profit was, therefore, set aside. 9. In the present case, we find that the basis for rejection of books is similar to that in the case of Vivek Jain Prop. Vijay Jewellers (supra) being that item-wise information of stock of jewellery had not been furnished by the assessee. The Ld. CIT (Appeals), we find, has rightly rejected this basis for rejection of books since undisputedly the assessee had been making purchases and sales weightwise as found by the CIT(A) in the bills relating to the same also and nothing adverse was found in the quantity in grams of the stock of gold . Therefore, merely because item-wise details were not maintained, it could not be said that the books did not disclose true r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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