ITO, NEW DELHI vs. M/S. MADHYA PRADESH VANIJYA COMPANY, DELHI

The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-XXV, New Delhi vide order dated 04/01/2013 on the following grounds of appeal: 1. “The ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 2,35,97,135/- by ignoring the fact that the assessee has not produced books of accounts & vouchers to prove that the trading results as declared are correct and verifiable.

Aggrieved by the order of the ld. Assessing Officer the assessee preferred an appeal before the ld. CIT(A). 3.1. Before the ld. CIT(A) the assessee submitted that sufficient opportunity was not granted to produce the books of accounts and other relevant details that was required at the time of assessment proceedings. The assessee therefore, submitted the details of audited books of accounts maintained by the assessee before the ld. CIT(A). The ld. CIT(A) remanded the details submitted by the assessee to the ld. Assessing Officer. 3.1. The ld. Assessing Officer submitted the remand report vide his letter dated 7/12/2012, wherein no adverse findings were recorded in respect of the books of accounts that has been filed by the assessee. The ld. CIT(A) observed that the ld. Assessing Officer has verified and examine the books of accounts on test check basis. He also observed that the ld. Assessing Officer has not record any adverse findings observation, regarding any the books of accounts. 3.2. The ld. CIT(A) accordingly restricted the addition made by the ld. Assessing Officer in respect of the adhoc addition made on GP rate, to an extent of Rs. 10 lacs. The ld. CIT(A) deleted the other additions made by the ld. Assessing Officer in respect of net profits and the addition made under the head “current liabilities”.

Aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us. 4.1. At the outset it is submitted by the ld. AR that no appeal has been preferred by the assessee against the addition confirmed by the ld. CIT(A). The Ld.AR supported the prder of the ld.CIT(A). 4.2. The ld. DR on the contrary submitted that the addition made by the ld. Assessing Officer in respect of the GP rate should be confirmed as the assessee had not produced books of accounts or details during the assessment proceedings. He also submitted that the GP rate declared by the assessee for the year under consideration was much less than the GP rate declared by the assessee in the preceding assessment year. The ld. DR placed his reliance on the order passed by the ld. Assessing Officer. 5. We have perused the orders passed by the authorities below the remand report and the paper book filed before us. 5.1. It is observed that the ld. CIT(A) has restricted the addition made by the ld. Assessing Officer on GP rate to an extent of Rs. 10 lacs, as the ld. Assessing Officer has arbitrarily, in an adhoc manner, made addition based on the GP rate of the preceding year. The ld. CIT(A) has also recorded a finding that in the remand report there is no adverse observation made by the ld. Assessing Officer. 5.2. We do not find any infirmity in the deletion of the addition by the ld. CIT(A). In respect of the addition, has been deleted by the ld. CIT(A) of the net profit, he relied upon the remand report, wherein the Assessing Officer has test checked, verified the details filed by the assessee, and has not made any adverse observation. We are, therefore, of the considered opinion that the order of the ld. CIT(A) does not suffer from any infirmity. We, therefore, uphold the order of the ld. CIT(A) and dismissed the grounds filed by the Revenue.