GIRISH SINGLA,CHANDIGARH vs. ACIT, CHANDIGARH

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee

against the order dated 01.02.2017 of the Commissioner of Income

Tax [hereinafter referred to as CIT(A)]-2, Chandigarh. The

assessee has taken following grounds of appeal:

ITA No.686/Chd/2017- Sh. Girish Singla, Chandigarh 2

agitated against the rejection of books of account and thereby

framing of assessment u/s 144 of the Income-tax Act, 1961 (in

short 'the Act') on the basis of best judgement rule and further the

estimation of income on the basis of GP rate and thereby addition

of Rs. 92,52,230/- into the income of the assessee.

attention to the impugned order of the Assessing officer to state

that the Assessing officer had rejected the books of account

mainly on two grounds, firstly, the assessee had not been

maintaining the stock register and further that in an enquiry it is

revealed that the firm namely M/s Shivalik Enterprise did not

actually exist from whom the assessee allegedly had made certain

sale & purchase transactions.

The Ld. Counsel of the assessee, at the outset, has submitted

that the assessee has been maintaining the books of account

properly and even all the bills and vouchers have been

maintained. That since the assessee has been dealing as a trader in

ITA No.686/Chd/2017- Sh. Girish Singla, Chandigarh 3

many items; hence, it was not possible to maintain the stock

register owing to the huge transactions in day to day activity of

the assessee. The Ld. Counsel has further submitted that the

Inspector appointed by the Assessing officer to inquire about the

Shivalik Enterprise had visited at wrong address. The purchases /

sales translations which were made by the assessee with M/s

Shivalik Enterprises were genuine. That the director of the said

proprietor of Shivailk Enterprise, for the reasons best known to

him, wrongly made a statement during the survey action that he

was the driver to the assessee and not the owner of the Shivalik

Enterprise.

of account have been rightly rejected by the Assessing officer.

That the firm Shivalik Enterprise was a bogus firm which was

proved not only by the enquiries made by the Inspector but also

from the statement of alleged proprietor of the Shivalk Enterprise,

who himself had admitted, that the was driver of the assessee. She

has further submitted that the Assessing officer therefore had

rightly estimated the income of the assessee on the basis of GP

rate.

The Ld. AR of the assessee, at this stage, has submitted that

even the GP rate has not been estimated by the Assessing officer

on the basis of comparables, which are doing business activity

identical to that of the assessee but on the basis of income of the

companies whose activities are not comparable to that of the

assessee.

ITA No.686/Chd/2017- Sh. Girish Singla, Chandigarh 4

rejection of account for non-maintenance of the stock register is

concerned, in our view, that cannot be sole criteria for rejection

of the books of account when the assessee has been maintaining

the quantitative details along with cash book, ledger, purchase

bills, sale bills, vouchers etc. However, so far as the genuineness

of the purchases / sales made from the alleged M/s Shivalk

Enterprise is concerned, though the assessee has stated that the

inspector of the Department has visited a wrong address, but

during the survey, the said proprietor of the Shivalik Enterprise

also admitted that he was not the actual proprietor of the Shivalik

Enterprise but a driver of the assessee. The assessee, on the other

hand, has contended that the firm Shivalik Enterprise did exist

and the transactions made by the assessee with it were genuine.

Shivalik Enterprises were doubtful, the Assessing officer was

required to make further enquiries. Since, it is the claim of the

assessee that the entire sales and purchases were genuine, in our

view, the assessee should be given opportunity to present its case

to prove the genuineness of the transactions with Shivalk

Enterprise. In view of this, we restore this issue to the file of the

Assessing officer to examine the issue afresh after giving

opportunity of hearing to the assessee on this issue. However, it is

made clear that even if after considering the submissions of the

assessee on this issue, the Assessing officer will of the view that

ITA No.686/Chd/2017- Sh. Girish Singla, Chandigarh 5

the books of account of the assessee are liable to be rejected, then in that event, we direct that the Assessing officer will consider the business activity of the assessee and will choose comparable companies having identical business activity and thereafter estimate the GP rate and assess the income of the assessee accordingly. With the aforesaid directions, the present appeal of the assessee is restored to the file of the Assessing officer. 7. In the result, the appeal of the assessee is treated as allowed for statistical purposes.

Order pronounced in the Open Court

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 23.04.2018 Rkk

Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR