SHRI HAR NARAIN SINGH,BHIWADI vs. ACIT CIRCLE-2, ALWAR

ORDER PER: SANDEEP GOSAIN, JM This is an appeal filed by the assessee against the order of ld. CIT(A), Alwar dated 20-08-2019 for the assessment year 2014-15 wherein the assessee has raised the following grounds of appeal. ‘’1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO of rejecting the books of account u/s 145(3) of the I.T. Act, 1961. The action of the ld. CIT(A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by accepting the books as it is.

2.1 During the course of hearing, the ld. AR of the assessee has not pressed the Ground Nos. 1 & 3. Therefore, both the grounds are dismissed being not pressed. 3.1 Apropos Ground No. 2 of the assessee, the facts as emerges from the order of the ld.CIT(A) are as under:- ‘’4.3 I have perused the assessment order as well as submissions of the appellant. Following facts have emerged.

3 SHRI HARI NARAIN SINGH VS ACIT, CIRCLE-2, ALWAR 3. That the appellant has surrendered an amount of Rs.20 lakhs on account of investment made in plot and construction of business premises.

4.4 I have taken into consideration above mentioned facts of the case. The AO’s action is justified as there is no ostensible reason for the decline in GP rate as compared to preceding years besides evidence of out of book sales was also recorded. Accordingly, the addition of Rs.2,52,812/- is sustained and the appellant’s ground of appeal on this issue is dismissed.’’ 3.2 During the course of hearing, the ld. AR of the assessee prayed that assessee’s brother also surrendered undisclosed income of Rs.20,00,000/-. His case was similar with that of the assessee. In the assessee’s brother case, the same CIT(A) deleted the trading addition by holding that trading addition subsumed in 4 SHRI HARI NARAIN SINGH VS ACIT, CIRCLE-2, ALWAR surrendered amount (CIT(A) page 4 last 6 lines). However, under 100% identical facts the case of the assessee has been decided differently. 3.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 3.4 After hearing both the parties and perusing the materials available on record, it is noted from the record that the assessee was aware of the irregularities in his books of accounts and he admitted that there was unrecorded income of Rs.20,00,000/- and also surrendered the same. Such income was only invested in land and building. The statements of the assessee were accepted and not disputed. Such surrendered income had covered all the irregularities in the books of the assessee and therefore, any further trading addition is unwarranted. The average GP of past 2 years is 14.91%. If surrendered income is taken into consideration and GP is recalculated which comes to 26% i.e. much higher than the average G.P. Rate. It is also noted that assessee’s brother also surrendered undisclosed income of Rs.20,00,000/-. His case was similar with that of the assessee. In the assessee’s brother case, the same ld. CIT(A) deleted the trading addition by holding that trading addition subsumed in surrendered amount (CIT(A) page 4 last 6 lines). The ld. AR submitted that the case of the assessee is identical with the facts the case of assessee’s brother but it has been decided differently. Taking into consideration the above facts as narrated by the assessee and if the surrendered income is taken into consideration and GP is recalculated which comes to 26% i.e. much higher