SMT. SAVITA GOEL,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

5. Thus, he concluded that the average G.P. on these four items was much higher than the G.P. shown by the assessee. He required the assessee to show-cause as to why the books of account may not be rejected u/s 145(3) as the sales were not vouched. After considering the assessee’s submissions, the Assessing Officer rejected the books of account and took G.P. at 21% of total purchases and re-drafted the trading and Profit & Loss Account and arrived at net profit of Rs.6,23,965/- after disallowing 25% of travelling and loading and unloading expenses. He further disallowed Rs.20,000/- from shop rent claimed at Rs.27,000/- by assessee. Ld. CIT(A) confirmed the addition of Rs.6,23,970/- inter-alia observing as under :-

“The appellant’s contention that the AO had not pointed out any defects in books of account has no force particularly in absence of sale vouchers, the books were incomplete and as such, the AO was fully justified in rejecting the same. The appellant during the course of assessment proceedings and appellate proceedings and utterly failed to substantiate her claim of sales affected at less than M.R.P. by supporting details and evidences. On the other hand in the light of the facts as discussed above it is not a case of making sales at less than M.R.P. The AO in the assessment order as well as remand report has cogently discussed the impugned issue which is not repeated here for the sake of brevity. The appellant has utterly failed in rebutting the findings of the AO as mentioned in the remand report. Thus it is held that the AO was perfectly justified in estimating GP @ 21% of total purchases at Rs.21,36,863/- and thereby determining net profit at Rs.6,23,970/-. The action of the AO is confirmed on this aspect. Grounds of appeal Nos.2 to 9 are dismissed.”

6. Ld. CIT(A) partly allowed the assessee’s appeal. Being aggrieved with the order of Ld. CIT(A), the assessee is in appeal before the Tribunal and has taken following grounds of appeal :-

“1. Appellate order as completed is wrong, illegal and against the facts.

3. That the appellant has maintained the proper accounts including Stock Register. The L'd A.O. has rejected the accounts for want of Sales Voucher without confronting any case, where the selling rate is higher them appellant. On the other hand the appellant AOP filed the comparable case of the same year, passed u/s 143(3) of the I.T.Act 1961 where the G.P. & Selling rate are lesser then appellant's G.P. and appellant’s Selling rate. The Appellant has also filed the judgement of Hon'ble High Court & Hon'ble ITAT but L’d C.I.T. (A) has neither given any importance to the comparable case & has ignored the judgement of Hon'ble High Court & Hon'ble ITAT. The L'd CIT(A) has not confronted any other case where G.P. shown is better than appellant case. In the circumstances, L'd CIT(A) is not justified to confirm the rejection of account.

4. That the L'd C.I.T. (A) has also confirmed the rate of G.P. applied by A.O. in assessment order on those grounds which are not existed in the case of appellant AOP. In fact, L'd CIT(A) has confirmed the application of higher rate on the basis of conjuncture & surmises.

7. The L’d CIT(A) should have not confirmed the enhancement of the sales on the basis of conjuncture & surmises.”

“7. Having heard the learned counsel for the parties, we are of the view that it is not necessary that a cash memo is required to be issued for each and every sale and consequently, books of accounts could not be rejected on the sole ground that only one consolidated cash memo was issued at the end of the day.

9. In the light of the aforesaid, the order of the Assessing Officer rejecting the books of account under Section 145(3) of the Act and consequently, making an addition of the income on estimate basis was reversed by the Tribunal. Further, such addition made on estimate basis is a question of fact as has been held in Commissioner (Custom Vs. Stoneman Marble, (2011) 2 SCC 758, Vijay K.Talwar Vs. CIT, (2011) 1 SCC 673, New Plaza Restaurant vs. ITO, 309 ITR 259 (HP) and Sanjay Oil Cake Vs. CIT, 316, ITR 274 (Gujrat)."

8. In the case of Prayag Wines (supra), the Hon’ble Allahabad High Court relied upon the decision in the case of Commissioner of Sales Tax vs. Vishnbu Chandra Vipin Chandra, 50 STC 345, wherein the Court held that failure to issue cash memos was insufficient to reject the books of account, where the books were otherwise verifiable. In the present case, the assessee in its reply dated 31.10.2011 noted at page 2 of the assessment order had clearly stated that Stock Register was maintained by assessee which gave all the details of opening stock, purchases and sales quantity-wise. The assessee had also filed month-wise details of purchases, sales and closing stock which has been noted at page 3 of the assessment order. Thus, in the present case also, it cannot be said that there were no details maintained by the assessee in regard to sales. Therefore, the decision relied upon by Ld. counsel for the assessee is squarely applicable to the facts of the present case and, therefore, respectfully following the same, it is held that the rejection of books of account solely on the basis of non-maintenance of sales vouchers was not justified. Accordingly, the addition made by the Assessing Officer, as confirmed by Ld. CIT(A), is deleted.