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Income Tax Appellate Tribunal, DELHI BENCHES ‘CAMP AT MEERUT’
Before: SHRI N. S. SAINI & SHRI KULDIP SINGH
Appellant by : S/Shri S.K. Jain, Adv. Respondent by : Shri Yogesh Sharma, Sr.D.R. सुनवाई क� तारीख/Date of Hearing : 09/01/2019 घोषणा क� तारीख /Date of Pronouncement: 16/01/2019 ORDER PER N.S. SAINI, A. M. These are the Cross Appeals filed by the Assessee as well as by the Revenue against the order of the ld. CIT(A), Meerut, dated 30.11.2016 for the Assessment Years 2013-14. In the grounds of appeal of the assessee, assessee has raised the following grounds as under:
“1. That the learned lower authorities erred in rejection the trading results declared by the which are as per audited books of accounts. 2. That the rejection of trading results as declared by the assessee by the lower authority is arbitrary, uncalled far and illegal. 3. That the learned lower authorities erred in estimating/applying Gross Profit rate of 12.05% as against
Gross Profit declared at 10.34 by the assessee.
4. That the addition in the trading results as sustained by the learned CIT(A) Meerut at Rs.535248/- is arbitrary and uncalled for and kindly be deleted.”
In the grounds of appeal of the Revenue, Revenue has raised the following grounds as under:
“1. Whether in the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred in law and facts in adopting the Gross Profit Rate of 12.5% in place of 15% estimated by the Assessing Officer, despite being in agreement with the Assessing Officer, in principle, for rejection of trading results in absence of any stock register but restricting the estimation of GP from 15% to 12.5% without assigning any reason for doing so and without establishing how the estimation made by the Assessing Officer was defective. 2. That in the facts and circumstances of the case, the order of the Commissioner of Income Tax (Appeals) may be set aside and that of the Assessing Officer be restored.” 3. The facts and issues involved in both the appeals are identical; therefore, they are being disposed of together.
The brief facts of the case are that the Assessing Officer observed that the assessee is engaged in publication of books (Montessori & Government Allotted Text Books). The assessee company maintains regular books of account and filed tax audit report as per provisions of Section 44AB along with the balance sheet, profit and loss account, trading account which was examined in the light of the documents filed/produced by the assessee. The Assessing Officer observed that in absence of stock register, the gross profit shown by the assessee @ 10.34% cannot be accepted, therefore, he estimated the gross profit @15% on the turnover of Rs.24,27,60,552/- and arrived at a figure of Rs.3,64,14,083/-. The assessee had shown gross profit of Rs.2,51,09,821/-, therefore, he made an addition of difference amount of Rs.1,13,04,262/- to the income of the assessee on account of low gross profit.
On appeal, the Ld. CIT(A) directed the Assessing Officer to compute the gross profit by applying the rate of 12.5% in place of 15% applied by the Assessing Officer and allowed partial relief to the assessee.
Being aggrieved by the order of the Ld. CIT(A) both the assessee and Revenue are in appeal before us. At the time of hearing before us, learned AR of the assessee has filed the copy of order of the Delhi ‘C’ Bench of the Tribunal in the case of the assessee itself for Assessment Year 2012-13 which is placed at pages 12 to 15 of the paper book filed before us and submitted that the Tribunal has held that books of account of the assessee cannot be rejected merely on the ground of non maintaining of stock register and consequently directed the Assessing Officer to accept the returned income of the assessee. He submitted that following the abovestated Tribunal order in the year under appeal, the addition made should be deleted.
Ld. DR also agreed with the above submission of the AR of the Assessee.
We find that the Tribunal in the Assessment Year 2012- 13 has held as under:
“3. The Tribunal has categorically held that in the nature of assessee’s business which is publication of books it is not physical for maintaining stock register account and merely non maintaining of stock register cannot lead to rejection of books of accounts. Thus following the same judicial precedents, we hold that for this year also the trading result cannot be disturbed on the ground that stock register has not been maintained. Accordingly the addition made by the AO and sustained by the Ld. CIT(A) is deleted. Consequently appeal filed by the assessee is allowed and revenue’s appeal is dismissed.”
Facts being identical, respectfully following the precedent, we delete the addition made by the Assessing Officer and sustained by the Ld. CIT(A). Consequently, the appeal filed by the assessee is allowed and Revenue’s appeal is dismissed.
In the result, the appeal of the assessee is allowed and the Revenue’s appeal is dismissed.
Order pronounced in the Court on this day, the 16/01/2019.