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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
The captioned appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-1, Udaipur dated 18.12.2018 in respect of Assessment Year: 2010-11 challenging
Sunil Kumar Pagaria v. ACIT confirmation of rejection of books of account u/s 145(3) of the Act and estimated addition of Rs. 5,00,000/- on account of GP rate thereof vide following grounds of appeal:
“1. The ld. Commissioner of Income Tax (Appeals) erred in law in confirming the rejection of books of accounts u/s 145(3) of the Act. 2. The ld. Commissioner of Income Tax (Appeals) further erred in law in sustaining part of the estimated addition of Rs.5,00,000/- on account of GP rate. 3. The appellant craves leave to add, alter, amend, modify and/or delete all or any of the grounds of appeal on or before the final hearing, if necessary.
2. At the outset, the ld. counsel for the assessee submitted that provisions of section 145(3) of the Act were invoked by the AO due to non- compliance of show cause notice dated 14.02.2013 fixing the date of hearing on 22.02.2023, although the said notice was not delivered to the appellant on or before the date of hearing, i.e., 22.02.2013 and that on receiving the notice on the later date, the AR of the assessee when reported to the office of the Assessing Officer for necessary compliance on 01.03.2013, it was intimated by the AO that the assessment order was already passed on 28.02.2013. The ld. counsel has submitted that the AO
Sunil Kumar Pagaria v. ACIT while rejecting the books of account has not pointed out any specific discrepancy in the books of account except mentioning that the AR of the assessee has reproduced only vouchers and these were not supported by any bills/invoice, however, he has not specified any specific vouchers which has not been supported by any bills or invoices. The ld. AR further argued that the appellant explained before the AO that for certain expenses, no invoices or bills can be raised relating to mines general expenses incurred in the mining area site being in the remote village. In support, he has placed reliance on the judgment of jurisdictional Rajasthan High Court in the case of CIT v. Dr. AP Bahal [2010] 322 ITR 71 (Raj.) and CIT v. GotanKhanij Lime Udhyog [2002] 256 ITR 2141 (Raj). He has also placed reliance on the judgment of Hon’ble Apex Court in the case of Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) wherein the Hon’ble Apex Court has observed that in the absence of any specific clear finding of the Assessing Officer about non genuineness of the entries made in the books of account, he cannot reject the books of the appellant. The Sunil Kumar Pagaria v. ACIT AR argued that a few vouchers pertaining to mine expenses of remote sides without specific deficiencies being pointed out by the AO is not in itself sufficient ground for rejecting the books of account of the appellant assessee.
The Ld AR submitted that the AO and the CIT(A) has adopted the GP rate for the year under considerations, i.e., Assessment year 2010-11 @ 17.11% ignoring the past history and trading results, were the GP rate has been shown fairly higher than the immediate preceding year as under:
Turnover Gross Profit GP Asstt Year 2008-09 36,97,130/- 10,10,392/- 27.33% 2009-10 92,13,097/- 11,98,391/- 13.01% 2010-11 72,42,794/- 12,39,124/- 17.11%
He contended that in the instant case, the Ld AO and CIT(A) had incorrectly, arbitrarily, and deliberately adopted higher GP to the preceding year, particularly when the trading results and the GP of the immediate previous year is available on record. He pleaded that the estimated addition made by the AO and confirmed by the Ld. CIT (A) may be deleted.
Sunil Kumar Pagaria v. ACIT 5. Per Contra, the learned DR relied on the impugned order.
Heard the rival contentions, perused material on record, the impugned order and the written submission filed. Admittedly, the AO while rejecting the books of account has not pointed out any specific discrepancy in the books of account except mentioning that the AR of the assessee reproduced only vouchers and these were not supported by any bills/invoice, however, he has not specified any specific vouchers which has not been supported by any bills or invoices. It is noted that the Ld. CIT(A) has merely endorsed the finding of the AO without rebutting the trading results and past history to disprove the contention of the appellant assessee regarding proportionate increase in the GP rate to the increase in turn over. It is settled law by Hon’ble Courts that whenever an assessing officer has to estimate the GP, he should have considered reasonably comparable data of immediate previous year and if the GP is more than that he should not be hesitate to accept the GP declared by assessee. There should not be a thump rule that wherever books of accounts has been rejected, the estimated addition is must.
The Coordinate Bench has held in the case of ITO v Hitesh Kumar Pachori (2008) 113 TTJ 357 (Jodh.) that " Gross profit rate declared in the Sunil Kumar Pagaria v. ACIT current year is better than previous year, no further addition can be made in declared results. In the instant case, primarily, the rejection of books has been without any basis meaning thereby the applicability of section 145(3) was unwarranted and secondly, the present case is covered by the verdict of the hon'ble Coordinate Bench decision (supra). Accordingly, we hold that the decision of the Ld. CIT(A) is infirm and perverse to the facts on record.
In the above view, we accept the grievance of the assessee as genuine and therefore, the lump sum addition of Rs.5,00,000/- on estimated basis is deleted.
Order pronounced in the open court on 14.12.2023