M/S TILAK RAJ AGGARWAL & BROTHERS,JALANDHAR vs. INCOME TAX OFFICER WARD IV (1), JALANDHAR

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ITA 459/ASR/2017Status: DisposedITAT Amritsar02 March 2022AY 2008-094 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal upheld the rejection of the books of accounts under Section 145(3). However, considering the nature of the business, it directed the AO to apply a GP rate of 5.5% on total purchases for estimating income.

What were the facts?

The assessee appealed against the CIT(A)'s order confirming an estimated GP ratio. The AO had rejected the assessee's books of accounts due to discrepancies in VAT returns and variations in GP rates on different items.

What were the issues?

Whether the rejection of books of accounts by the AO was justified and what is the appropriate GP rate for estimating income.

Which sections of the Income-tax Act were involved?

Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

Hearing: 28.02.2022Pronounced: 02.03.2022

ORDER Per Dr. M. L. Meena, AM:

This appeal has been filed by the Assessee against the impugned order dated 15.09.2016 passed by Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar, in respect of the Assessment Year 2008-09.

2.

Sh. Pratap Singh for Gunjeet Syal Advocate, AR on behalf of the assessee appeared with adjournment application dated 2602 2022 wherein the council has stated as under:

In this regard it is humbly submitted that I am matters before the Hon’ble Delhi High Court, I shall be highly obliged if you do very kindly adjourn the said appeal for some other date.

3.

The present appeal filed by the assessee is an old appeal pertaining to assessment year 2008 – 09 and the case has been fixed for hearing on 20 – 04 – 18, 19 – 07 – 18, 27 – 08 – 18, 05 – 12 – 18, 10 – 01 – 19, 09 – 08 – 19, 16 – 08 – 2019, 27 – 08 – 19, 15 – 10 – 19, 27 – 11 – 19, 16 – 03 – 20, 14 – 12 – 2021, 17 – 12 – 2021, 16 – 02 – 2022, and 28 – 02 – 2022 at the request of the counsel for the assessee.

4.

Considering the nature of the issue raised by the appellant as evident from the grounds of appeal

, opportunities granted to the assessee and the it is decided to take up the case for hearing and the CIT DR for the Department was asked to present the argument on behalf of Department. He has explained the facts and submitted that he supports the impugned order.

5. Having heard the learned CIT DR and perusal of the records, we find that the assessee has objection that the CIT appeal has been wrong in confirming estimated GP ratio at the rate of 5.75% being not satisfied with the explanation of the difference of � 60, 889/-. This contended in the grounds of appeal that the trading addition of � 229,793 made by the AO after rejecting the books of accounts under section 145(3) of the act is without assigning any legal and logical reasoning. The assessing officer has made addition of � 229, 793/- for two 6. reasons that primarily assessee failed to explain the difference of � 608 89/- on account of number of purchases as per VAT return and so the trading account could not be explained and secondly, he found significant difference in the rate of GP on different items of iron steel traded by the appellant. The AO has applied GP rate of 6.21% as against GP rate of 5.02% declared by the appellant and which has been estimated by the CIT appeal at the rate of 5.75%.

7. From the factual matrix of the case, it is evident that the assessee failed to explain the difference of � 608 89/- on account of number of purchases as per VAT return and reconciliation in the variation in GP rate on different items varying from 1.8% t0 9.0% and major part part of the sales of channels on which GP rate of 8.1% has been declared by the assessee. In our view, CIT appeal was justified in holding that the AO was right in rejecting the books of accounts after applying provisions of section 145(3) of the income tax act by following the coordinate bench decision in para-nine of the assessment order. Thus, the ground no.2 of rejection of books of accounts after applying the provisions of section 145(3) is rejected.

8. Considering the nature of business and variety of items traded by the appellant assessee, it would be reasonably fair and just to apply GP rate of 5.5% of the total purchases to estimate the income of the appellant assessee. The AO is directed accordingly.

9.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 02.03.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Doc* Date: 02.03.2022 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T

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