HARISH AHUJA vs. COMMISSIONER OF INCOME TAX-II

Whether the Reporters of the local papers may be allowed to see the judgment?

To be referred to the Reporters or not? Yes

Whether the judgment should be reported in the Digest? PRESENT: Mr. Ravi Shankar, Advocate for the appellant. AJAY KUMAR MITTAL, J.

After hearing learned counsel for the assessee and perusing the record, we do not find any substance in the argument raised by the learned counsel. The Assessing Officer passed the assessment order under Section 143(3) of the Act by applying GP rate of 10% on gross sales of ` 11.74 crores after rejecting the books of account under Section 145(3) of the Act on the ground that no stock register was maintained by the assessee and, thus, made an addition of ` 41,09,728/- to the total returned income. The CIT(A) held that the figure of closing stock declared by the assessee in the profit and loss account was not verifiable in the absence of stock register and so the GP rate was not verifiable and accordingly restricted the GP rate to 9% and upheld the rejection of books of account. The Tribunal while upholding the orders of the Assessing Officer as well as the CIT(A) qua rejection of books of account, estimated the GP rate at 8% instead of 9% as ordered by the CIT(A).

The assessee was trading in the items of well established companies and is also a wholesaler C&F agent. In order to check veracity of the gross profit disclosed by the assessee, maintenance of stock register by the assessee was essential. The Assessing Officer had compared the gross profit rate of the assessee viz-a-viz other similar concerns. No satisfactory explanation had been furnished by the assessee for not maintaining the stock register. The rejection of books of account of the assessee by the Assessing Officer was, thus, justified. The relevant findings recorded by the Tribunal read as under:- GURBACHAN SINGH 2015.09.04 15:58 authenticity of this document High Court Chandigarh -4- “7. On consideration of the rival submissions, we are of the view rejection of the books of account is justified in the matter. The Assessing Officer has verified the GP rate of different concerns and found assessee has been declaring different GP, though same calculation was found to be defective by ld. CIT (Appeals) but the fact remains that there was a variation in the GP rate and further, assessee has not maintained any stock register, therefore the verification of the proper gross profit could not be done by the Assessing Officer. The valuation of the closing stock was thus, not verifiable. It was also found that assessee is trading in the items of well established companies and is a wholesaler/C&F agent. Therefore, stock register should have been maintained by assessee. Therefore, considering the objections raised by the Assessing Officer, the rejection of books of account is justified. We, therefore, confirm the orders of the authorities below in rejecting the books of account of the assessee. However, considering the history of the assessee in which the assessee has declared lesser gross profit and accepted by the Department, it would be reasonable and proper to direct the authorities below to apply gross profit rate of 8% instead of 9% applied by the ld. CIT(Appeals). The orders of authorities below to that extent are modified and it is directed that GURBACHAN SINGH 2015.09.04 15:58 authenticity of this document High Court Chandigarh -5- income of the assessee be computed by applying GP rate of 8% instead of 9% applied by the ld. CIT (Appeals).”

Now adverting to the judgments in Pandit Brothers, Ashoke Refractories Pvt. Ltd. and Smt. Poonam Rani's cases (supra) relied upon by the learned counsel for the appellant, it may be noticed that the principle of law enunciated therein, is well recognized, however, being based on individual fact situation involved therein would be of no help to the case of the assessee. In view of the findings noticed hereinbefore, no benefit can be derived by the assessee from the aforesaid pronouncements.

In view of the above, no substantial question of law arises in this appeal. Accordingly, finding no merit in the instant appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE August 24, 2015 (RAMENDRA JAIN) gbs JUDGE GURBACHAN SINGH 2015.09.04 15:58 authenticity of this document High Court Chandigarh