ITO, JODHPUR V. Shri Anand Hundia, JODHPUR

ITA 100/JODH/2014

• Counselvise Citation: 10023314 RSA 2014
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN; GAUTAM BAID
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 100 /JODH/2014 (A.Y. 200 9 - 1 0 ) IT O , WARD - 1 (1) , VS. SHRI ANAND HUNDIA, JODHPUR . PROP. M/S. ARIHANT GHEE AGENCY , DIWAN KI HAWELI , GHASMANDI, JODHPUR. PAN NO. AACPH 0910 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN & SHRI GAUTAM BAID. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 18 / 0 7 /201 4 . DATE OF PRONOUNCEMENT : 07 /0 8 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 10 /01 /2014 OF L D . CIT(A), J ODHPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED TO ACCEPTS ASSESSEES CONTENTION THAT HE HAD BOOKED PURCHASE AT HIGHER RATES AND GOODS WERE SOLD AT LOWER RATES IGNORING THE 2 PURCHASE / SALE TRANSACTIONS FOR 11 MONTHS FROM APRIL 2 008 TO FEBRUARY 2009 . 2. THE LD. CIT(A) HAS ERRED IN NOT HOLDING THE LOSS INCURRED IN THE MONTH OF MARCH 2009 AS CONTRIVED LOSS TH R OUGH BOGUS TURNOVER. 3. THE APPELLANT CRAVES TO ADD, AMEND, OR ALTER ANY OR ALL THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF APPEAL IS FINALLY HEARD FOR DISPOSAL. 2 FACTS RELATING TO THIS CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 24/09/2009 DECLARING AN INCOME OF RS. 3,27,060/ - . LATER ON, THE CASE WAS SELE C TED FOR SCRUTINY . THE ASSESSING OFFICER REJECTED THE TRADING RESULTS OF THE ASSESSEE AND WORKED OUT THE GROSS PROFIT AT RS. 32,12,919/ - BY APPLYING GROSS PROFIT RATE OF 0.75% ON THE TURNOVER DECLARED BY THE ASSESSEE INSTEAD OF GROSS PROFIT SHOWN BY THE ASSESSEE AT RS. 8,96,928/ - . ACCORDINGLY, ADDITION OF RS. 23,15,991/ - WAS MADE. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) , WHO DELETED THE ADDITION BY OBSERVING IN PARA 4.3 TO 4.41 OF THE IMPUGNED ORDER WHICH IS REPRODUCED VERBATIM AS UNDER: - 4.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ORDER OF THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT AND I FIND THAT THE APPELLANTS OBJECTION IS AGAINST THE TRADING ADDITION BY APPLYING HIGHER G.P. RATE OF 0.75% ON TOTAL TURNOVER OF RS. 42,83,89,226/ - . THE CONTROVERSY AROSE WHEN THE APPELLANT DECLARED THE TOTAL RECEIPTS AT RS. 45,48,294/ - ( WHICH CONSISTED OF SURRENDERED INCOME OF RS. 26,06,210/ - ) AND OUT OF THIS RECEIPTS, THE APPELLANT CLAIMED DEDUCTION OF RS. 42,04,826/ - ON ACCOUNT OF VARIOUS EXPENSES , THEREBY SHOWING NET PROFIT OF RS. 3,43,468/ - ONLY. THE ASSESSING 3 OFFICER OBSERVED THAT IF THE SURRENDERED INCOME IS CONSIDERED SEPARATELY THEN THE ASSESSEES LOSS COMES TO RS. 22,62,742/ - . THUS, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ASSESSEES THEORY OF LOSS. DURING THE COURSE OF THE APPELLATE PROCEEDING, THE APPELLANTS CONTENDED THAT SURVEY PARTY AS WELL AS THE ASSESSING OFFICER DID NOT POINT ANY DEFECT IN THE BOOKS OF ACCOUNTS. IT WAS THE CONTENTION OF THE APPELLANT THAT THE ASSESSEE WAS ALR EADY UNDER LOSS OF RS. 19,18,529/ - AT THE TIME OF SURVEY IF VARIOUS EXPENSES/DEDUCTIONS WHICH ARE SUPPOSED TO BE CONSIDERED AFTER END OF THE ACCOUNTING YEAR, ARE TAKEN INTO CONSIDERATION. 4.3.1 I FIND THAT THE ASSESSING OFFICER WHILE MAKING THE TRADING ADDITION HAS NOT PROPERLY CONSIDERED THE ASSESSEES EXPLANATION AS WELL AS VARIOUS DETAILS / EVIDENCES FILED BY HIM IN SUPPORT OF HIS CLAIM. I FIND THAT THE ASSESSING OFFICER WITHOUT ANY OBJECTIVE FINDING ON EXAMINATION OF ASSESSEES CLAIM WAS ADVERSELY IN FLUENCED BY INSTANCES OF ASSESSEES PURCHASE AT HIGHER RATES AND SALES AT LOWER RATES ON THE SAME DAY OR ON THE VERY NEXT DAY. I FIND THAT THIS ALLEGATION OF THE ASSESSING OFFICER IS NOT BASED ON PROPER APPRECIATION OF THE FACTS. THE ASSESSEE BEING A WHOLE SALER HAS TO BOOK HIS PURCHASE ORDER IN ADVANCE (UNDER FORWARD TRANSACTION) ON WHATEVER PREVAILING RATE OF ITEMS EXISTED ON THAT TIME AND AT THE TIME OF DELIVERY, THE ASSESSEE IS BOUND TO RECEIVE THE GOODS ON THE RATE OF PURCHASE ORDER ALREADY BOOKED. SUBS EQUENTLY, IF THE SALE PRICE FALLS DOWN, THE ASSESSEE CANNOT BE HELD TO BE RESPONSIBLE FOR THAT AND BEING A DEALER HE HAS TO SELL HIS ITEMS ON THAT LOWER RATE IN NORMAL COURSE OF BUSINESS. BEFORE ME, THE APPELLANT SUBMITTED THAT AS AN EVIDENCE OF PURCHASE A ND SALE, THE ASSESSEE HAS FILED VAT INVOICES, SHOWING DATE OF BUYERS ORDER AND DELIVERY DATE BUT THE ASSESSING OFFICER HAS NOT CONSIDERED THE SAME WITHOUT PROVING IT BOGUS. THE COPIES OF FEW OF THEM WERE FURNISHED DURING THE APPELLATE PROCEEDING. UPON PERU SAL OF THE SAME, I FIND THAT DATES OF ORDER AND DELIVERY DATES ARE CLEARLY MENTIONED, IT PROVES THE APPELLANTS CLAIM THAT ON DELIVERY DATE THE GOODS ARE SUPPLIED AT THE RATE OF ORDER AND NOT AT PREVAILING MARKET RATE ON DELIVERY DATE. THE APPELLANT HAS SU BMITTED THE COPY OF BOOKING DETAILS OF GUJARAT SPICES AND OIL SEEDS GROWERS CO - OP. UNION LTD. FROM WHOM THE GOODS ARE CLAIMED TO HAVE BEEN PURCHASED UNDER FORWARD TRANSACTIONS WHEREIN THE DATE OF BOOKING AND THE RATE OF PURCHASE ARE MENTIONED WHICH PROVE T HE CLAIM OF THE APPELLANT. THUS, THE APPELLANT HAS BEEN ABLE TO PROVE SATISFACTORILY THAT ON THE DATE OF DELIVERY, THERE IS DIFFERENCE IN PURCHASE AND SALE RATE. DURING THE APPELLATE PROCEEDING, VIDE 4 ITS LETTER DATED 8 - 1 - 2014, THE APPELLANT HAS FURNISHED A CHART SHOWING FLUCTUATION IN PRICE OF SOYA OIL AS PER NCDEX DURING THE YEAR UNDER CONSIDERATION. THE CHART SHOWS THAT THE PRICE OF SOYA OIL VARIED FROM RS. 601.85 PER UNIT (PER 10 KG.) IN MARCH, 2008 TO RS. 445.90 PER UNIT IN MARCH, 2009. THE EVIDENCES FU RNISHED BEFORE ME SUCH AS VAT INVOICES CLEARLY PROVE THAT THESE WERE ON RECORD BUT THE ASSESSING OFFICER HAS NEITHER DISCUSSED ABOUT THIS ASPECT OF THE ASSESSEES EXPLANATION NOR CONSIDERED THIS I N HIS ASSESSMENT ORDER. IN VIEW OF THESE, THE ASSESSING OFFI CERS ALLEGATION IS FOUND TO BE INCORRECT THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN THE SHAPE OF ORDER BOOK TO SUBSTANTIATE HIS CONTENTION. 4.3.2 I FURTHER FIND THAT THE ASSESSING OFFICERS OBSERVATION THAT THE ASSESSEE HAS MANIPULATED THE SALES BILLS IS ONLY BASED ON PRESUMPTION. NO CONCRETE FINDING OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER IN SUPPORT OF HIS OBSERVATION. HE HAS ALSO FAILED TO POINT OUT ANY SPECIFIC INSTANCE OF SALE BILL WHICH WAS FOUND TO BE MANIPULATED. EV EN THESE PURCHASE AND SALES BILLS ARE FROM TRADER TO TRADER AND NOT TO CONSUMER. SO NO CREDENCE CAN BE GIVEN TO ANY OBSERVATION BASED ON SUSPICION AND PRESUMPTION. 4.3.3 I FURTHER FIND THAT THE ASSESSING OFFICER HAS WRONGLY CONCLUDED THAT THE ASSESSEE HA D BOOKED A LOSS IN MARCH BY WAY OF INCREASING PURCHASE AND SALES. FROM THE COPY OF P&L ACCOUNT (DRAWN BY SURVEY PARTY AND CERTIFIED BY THE ASSESSING OFFICER), I FIND THAT AS ON 25 - 2 - 2009 I.E. DATE OF THE SURVEY, THE THERE WAS NET PROFIT OF RS. 9,739/ - ONLY . THUS, IT WAS CLAIMED THAT AFTER DEBITING VARIOUS EXPENSES, THERE WAS LOSS EVEN PRIOR TO THE DATE OF SURVEY. I FIND THAT CERTAIN EXPENSES LIKE INTEREST, DEPRECIATION, BROKERAGE, WAGES TO STAFF, LIGHT AND WATER EXPENSES ETC. WHICH ARE USUALLY DETERMINED AN D DEBITED AT THE CLOSE OF THE ACCOUNTING PERIOD WERE NOT CONSIDERED BY THE SURVEY PARTY AS WELL AS THE ASSESSING OFFICER. THE APPELLANTS CLAIM IS FOUND TO BE CORRECT THAT AFTER DEBITING THE SAME, THERE WAS LOSS OF RS. 19,18,529/ - . FROM THE P&L ACCOUNT, I FIND THAT AFTER DEBITING THE VARIOUS EXPENSES LIKE DEPRECIATION AND INTEREST OF 11 MONTHS I.E. UP TO 25 - 2 - 2009 NET LOSS COMES TO RS. 19,18,529/ - . THIS FACTS IS CLEARLY PROVED FROM THE SCANNED COPY OF P&L ACCOUNT SUBMITTED DURING THE ASSESSMENT PROCEEDING, WHICH IS AS UNDER: - 5 4.4 FURTHER THE ASSESSING OFFICERS OBJECTION THAT THE ASSESSEE HAS MADE MORE PURCHASE AND SALES IN THE MARCH TO BOOK A LOSS, IS CONTRARY TO THE DETAILS OF PURCHASE AND SALES SUBMITTED BEFORE ME, THE SAME IS REPRODUCED AS UNDER: - ARIHANT GHEE AGENCIES AY 2009 - 10 MONTH SALES (RS.) PURCHASES (RS.) APRIL, 2008 31552498/ - 30708762/ - MAY, 2008 48063408/ - 44565898/ - JUNE, 2008 28530534/ - 27694550/ - JULY, 2008 42285295/ - 45493118/ - AUGUST, 2008 30465049/ - 26513517/ - SEPTEMBER, 2008 37691567/ - 29843604/ - OCTOBER, 2008 33792626/ - 34564237/ - NOVEMBER, 2008 53273946/ - 53807100/ - DECEMBER, 2008 46362365/ - 47607809/ - JANUARY, 2009 35133857/ - 34058747/ - FEBRUARY, 2009 33218144/ - 27863880/ - MARCH, 2009 37986558/ - 36577088/ - 4.4.1. AS CAN BEEN SEEN FROM THE CHART, I FIND THAT IN THE MONTH OF MAY, 2008, THE TOTAL SALES WAS RS. 4,80,63,408/ - AND PURCHASE WAS RS. 4,45,65,898/ - AND IN THE NOVEMBER, 2008, THE TOTAL SALES WAS RS. 5,32,73,946/ - AND TOTAL PURCHASE WAS RS. 5,38,07,100/ - . I FIND THAT THERE IS NOT MUCH DIFFERENCE BETWEEN THE PURCHASE AND SALES MONTH WISE IN COMPARISON TO MARCH. THUS, IT CANNOT BE SAID THAT ONLY IN THE MONTH OF MARCH, THE APPELLANT HAS INCREASED THE PURCHASE AND SALES MANY FOLD TO REDUCE THE PROFIT. IT WAS EXPLAINED BY THE APPELLANT THAT AT THE CLOSE OF ACCOUNTING PERIOD, EVERY BUSINESSMAN USED TO CLEAR MAXIMUM STOCK, SO CERTAINLY THE SALES WOULD BE MORE IN THE MONTH OF MARCH. IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE TRADING ADDITION OF RS. 32,12,919/ - BY APPLYING HIGHER G.P. RATE OF 0.75%. THE TRADING ADDITION IS DELETED. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE TRADING RESULTS SHOWN BY THE APPELLANT. THE 6 GROUNDS RAISED I N THIS REGARD ARE ALLOWED. NOW THE DEPARTMENT IS IN APPEAL. 4. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION DATED 23/05/2014 OF THIS BENCH OF THE TRIBUNAL IN I.T.A.NO. 87/J U /2014 IN THE CASE OF ITO, WARD - 1(4), JODHPUR VS. SHRI SURENDRA KUMAR HUNDIA FOR THE A.Y. 2009 - 10 , COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. 5. IN HIS RIVAL SUBMISSIONS, LEARNED D.R. ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 6 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF ITO, WARD - 1(4), JODHPUR VS. SHRI SURENDRA KUMAR H UNDIA (SUPRA) WHEREIN THE ORDER OF THE LD. CIT(A) HAS BEEN UPHELD, WHO DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN SIMILAR CIRCUMSTANCES AS IN THE CASE OF THE ASSESSEE. THE RELEVANT FINDINGS HA VE BEEN GIVEN IN PARA 4 OF THE SAID ORDER WHICH READ AS UNDER: - 7 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOUND THAT THE DELETION OF ADDITION OF RS. 11,35,073/ - BY THE LD. CIT(A) IS IN ORDER. THE LD. CIT(A) HAS GIVEN HIS FINDING AT PARAS 4.3 TO 4.5 WHICH WE REPRODUCE HEREINBELOW FOR READY REFERENCE: 4.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ORDER OF THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT AND I FIND THAT THE APPELLANT'S FIRST OBJECTION IS AGAINST THE TRADING ADDITION OF RS. 11,35,073/ - WHICH WAS RESULT OF APPLYING HIGHER G.P. RATE OF 1.82% ON ESTIMATED SALES OF RS. 16,60,00,000/ - . THE CONTROVERSY AROSE WHEN THE APPELLANT DECLARED THE TOTAL RECEIPTS AT RS. 35,67,738/ - (CONSISTING OF SURRENDERED INCOME OF RS. 15,00,000/ - ) AND OUT OF THIS RECEIPTS, THE APPELLANT CLAIMED DEDUCTION OF RS. 32,31,165/ - ON ACCOUNT OF VARIOUS EXPENSES, THEREBY SHOWING NET PROFIT OF RS. 3,36,574/ - ONLY. THE ASSESSING OFFICER OBSERVED THAT IF THE SURRENDERED IS CONSIDERED SEPARATELY THEN THE ASSESSEE BO OKED A LOSS OF RS. 11,63,836/ - . THUS, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ASSESSEE'S THEORY OF LOSS. DURING THE COURSE OF THE APPELLATE PROCEEDING, THE APPELLANT'S CONTENDED THAT SURVEY PARTY AS WELL AS THE ASSESSING OFFICER DID NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS. IT WAS THE CONTENTION OF THE APPELLANT THAT THE ASSESSEE WAS ALREADY UNDER LOSS AT THE TIME OF SURVEY AMOUNTING TO LOSS OF RS. 9,62,531/ - AFTER DEBITING VARIOUS EXPENSES WHICH ARE SUPPOSED TO BE CONSIDERED AFTER THE END OF ACCOUNTING YEAR. 4.3.1. I FIND THAT THE ASSESSING OFFICER WHILE MAKING THE TRADING ADDITION OF RS. 11,35,073/ - HAS NOT PROPERLY CONSIDERED THE ASSESSEE'S EXPLANATION AS WELL AS VARIOUS DETAILS / EVIDENCES FILED BY HIM IN SUPPORT OF HIS CLAIM. I FIND T HAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FORMED A HIGHLY SUBJECTIVE AND ADVERSE VIEW NOTICING THAT ASSESSEE'S PURCHASE ARE AT HIGHER RATE AND HIS SALES ARE AT LOWER RATE ON THE SAME DAY OR ON THE VERY NEXT DAY. I FIND THAT THIS ALLEGATION OF THE A SSESSING OFFICER IS NOT BASED ON PROPER APPRECIATION OF THE FACTS. THE ASSESSEE BEING A WHOLESALER HAS TO BOOK HIS PURCHASE ORDER IN ADVANCE (UNDER FORWARD TRANSACTION) ON WHATEVER PREVAILING RATE OF ITEMS EXISTED ON THAT TIME AND AT THE TIME OF ORDER, THE ASSESSEE IS BOUND TO RECEIVE THE GOODS ON THE RATE OF PURCHASE ORDER ALREADY BOOKED. SUBSEQUENTLY, IF THE SALE PRICE FALLS DOWN, THE ASSESSEE CANNOT BE 8 HELD TO BE RESPONSIBLE FOR THAT AS BEING A DEALER HE HAS TO SELL HIS ITEMS IN NORMAL COURSE OF BUSINESS . BEFORE ME, AS AN EVIDENCE OF PURCHASE AND SALE, THE APPELLANT HAS FILED VAT INVOICES, SHOWING DATE OF BUYERS ORDER AND DELIVERY DATE BUT THE ASSESSING OFFICER HAS NOT CONSIDERED THE SAME WITHOUT PROVING IT BOGUS AS THE SAME WERE FILED BEFORE THE ASSESSIN G OFFICER TOO. THE COPIES OF FEW OF THEM WERE FURNISHED DURING THE APPELLATE PROCEEDING. UPON PERUSAL OF THE SAME, I FIND THAT DATE OF ORDER AND DELIVERY DATE IS CLEARLY MENTIONED THEREIN, IT PROVES THE APPELLANT'S CLAIM THAT ON DELIVERY DATE THE GOODS ARE SUPPLIED AT THE RATE OF ORDER AND NOT AT PREVAILING MARKET RATE ON DELIVERY DATE. THE APPELLANT HAS SUBMITTED THE COPY OF BOOKING DETAILS OF BUNGE INDIA LTD. FROM WHOM THE GOODS ARE PURCHASED UNDER FORWARD TRANSACTIONS WHEREIN THE DATE OF BOOKING AND THE RATE OF PURCHASE ARE MENTIONED WHICH PROVE THE CLAIM OF THE APPELLANT. APART FROM THE ABOVE, THE APPELLANT HAS ALSO PRODUCED A CHART SHOWING FREQUENT FLUCTUATION IN THE RATE OF SOYA OIL DURING THE YEAR AS PER NCDEX. THUS, THE APPELLANT HAS SATISFACTORY BEE N ABLE TO PROVE THAT ON THE DATE OF DELIVERY THERE IS DIFFERENCE IN PURCHASE AND SALE RATE. THE EVIDENCES FURNISHED BEFORE ME SUCH AS VAT INVOICES S (CERTIFIED BY THE ASSESSING OFFICER HIMSELF) CLEARLY PROVE THAT THESE WERE ON RECORD BUT THE ASSESSING OFFI CER HAS NEITHER DISCUSSED ABOUT THIS ASPECT OF THE ASSESSEE'S EXPLANATION NOR CONSIDERED THIS IN HIS ASSESSMENT ORDER. IN VIEW OF THESE, THE ASSESSING OFFICER'S ALLEGATION IS FOUND TO BE INCORRECT THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF HIS CLAIM IN THE SHAPE OF ORDER BOOK. 4.3.2. I FURTHER FIND THAT THE ASSESSING OFFICER'S OBSERVATION THAT THE ASSESSEE HAS MANIPULATED THE SALES BILLS IS ONLY BASED ON PRESUMPTION. NO CONCRETE FINDING OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSE SSING OFFICER IN SUPPORT OF HIS OBSERVATION. HE HAS ALSO FAILED TO POINT OUT ANY SPECIFIC INSTANCE OF SALE BILL WHICH WAS FOUND TO BE MANIPULATED. RATHER, ON PERUSAL OF THE RECORD. I FIND THAT THE ASSESSING OFFICER HAS VERIFIED THE PURCHASE AND SALES BILLS FROM CONCERN TRADERS AND COULD NOT FIND FAULT IN THEM. EVEN THESE PURCHASE AND SALES BILLS ARE FROM TRADER TO TRADER AND NOT TO CONSUMER. SO NO CREDENCE CAN BE GIVEN TO ANY OBSERVATION BASED ON SUSPICION AND PRESUMPTION. 4.3.3. I FURTHER FIND THAT THE A SSESSING OFFICER HAS WRONGLY CONCLUDED THAT 9 THE ASSESSEE HAD BOOKED A LOSS IN MARCH BY WAY OF INCREASING PURCHASE AND SALES. FROM THE COPY OF P&L ACCOUNT (DRAWN BY SURVEY PARTY AND CERTIFIED BY THE ASSESSING OFFICER), I FIND THAT AS ON 25 - 2 - 2009 I.E. DATE OF THE SURVEY, THE ASSESSEE WAS ALREADY SUFFERING FROM THE NET LOSS OF RS. 1,22,380/ - . IT WAS CLAIMED THAT THIS LOSS WAS PRIOR TO THE DATE OF SURVEY. I FURTHER FIND THAT AFTER TAKING INTO ACCOUNT CERTAIN EXPENSES LIKE INTEREST, DEPRECIATION, BROKERAGE, WAG ES TO STAFF, LIGHT AND WATER EXPENSES ETC. WHICH ARE USUALLY DETERMINED AND DEBITED AT THE CLOSE OF THE ACCOUNTING PERIOD, I FIND THAT THE NET LOSS AS ON 25 - 2 - 2009 ITSELF WAS RS. 1,22,380/ - AND AFTER DEBITING THE VARIOUS EXPENSES LIKE DEPRECIATION AND INTE REST OF 11 MONTHS I.E. UP TO 25 - 2 - 2009, NET LOSS COMES TO RS. 9,62,531/ - . 4.4. FURTHER THE ASSESSING OFFICER'S OBJECTION THAT THE ASSESSEE HAS MADE MORE PURCHASE AND SALES IN THE MARCH TO BOOK A LOSS, IS CONTRARY TO THE DETAILS OF PURCHASE AND SALES SUBM ITTED BEFORE ME. THE APPELLANT HAS FURNISHED THE DETAILS OF PURCHASE AND SALES AS UNDER: - MONTH APRIL 08 MAY 08 JUNE 08 SALES DETAIL 8554595.61 15870094.66 12308454.64 PURCHASES DETAIL 6953701.06 14614075.30 13662808.74 1ST QUARTER 36733144.91 35230585.10 JULY 08 AUGUST 08 SEPT. 08 14449005.29 12610502.68 14195281.37 14382498.42 10851006.88 14993661.70 2ND QUARTER 41254789.34 40227167.00 OCT. 08 NOV. 08 DEC. 08 18961360.21 13183707.70 14039140.69 16491679.47 13073599.49 14074322.78 3RD QUARTER 46184208.60 43639601.74 JAN. 09 FEB. 09 MARCH 09 14181924.38 8707737.30 22398323.67 10940238.08 7782286.44 23218380.91 4TH QUARTER 45087985.35 41940905.43 TOTAL 169460128.20 161038259.27 10 4.4.1. AS CAN BEEN SEEN FROM THE ABOVE CHART, I FIND THAT IN THE 3 QUARTER I.E. 31 - 10 - 2008 TO 31 - 12 - 2008, THE TOTAL SALES WAS RS. 4,61,84,208/ - AND PURCHASE WAS RS. 4,36,39,601/ - AND IN THE 4TH QUARTER I.E. FROM 1 - 1 - 2009 TO 31 - 3 - 2009, THE TOTAL SALES WAS RS. 4,52,87,985/ - AND TOTAL PURCHA SE WAS RS. 4,19,40,905/ - . I FIND THAT THERE IS NOT MUCH DIFFERENCE BETWEEN THE PURCHASE AND SALES QUARTER AND AS WELL AS MONTH WISE IN COMPARISON TO MARCH. THOUGH THE PURCHASE AND SALE OF MARCH ARE HIGH BUT NOT MANY FOLDS AS ALLEGED BY THE ASSESSING OFFICE R. IN THE MONTH OF OCT, 2008, THE TOTAL SALES WAS RS. 1,89,61,360/ - AND IN MARCH 09, IT WAS RS. 2,23,98,323/ - . THUS, IT CANNOT BE SAID THAT ONLY IN THE MONTH OF MARCH, THE APPELLANT HAS INCREASED THE PURCHASE AND SALES MANY FOLD TO REDUCE THE PROFIT. IT WA S EXPLAINED BY THE APPELLANT THAT AT THE CLOSE OF ACCOUNTING PERIOD, EVERY BUSINESSMAN TRIES TO CLEAR MAXIMUM STOCK, SO CERTAINLY THE SALES WOULD BE MORE IN THE MONTH OF MARCH. 4.5. I FURTHER FIND THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS NOT POINTED OUT SPECIFIC DEFECTS IN THE MAINTENANCE OF THE BOOKS OF ACCOUNTS. EVEN HE HAS NOT REJECTED THE BOOKS OF ACCOUNT U/S 145(3) EXPRESSLY OR IMPLIEDLY. NO TRADING ADDITION CAN BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNTS. FURTHER, I FIND THAT THE SAL E ESTIMATED BY THE ASSESSING OFFICER AT RS. 1,60,00,000/ - AS AGAINST RS. 16,51,47,556/ - IS ALSO WITHOUT ANY BASIS. THE APPLICATION OF HIGHER G.P. RATE AT 1.82% IS WITHOUT ANY BASIS AND IGNORING THE FACTS/EXPLANATION FURNISHED BY THE ASSESSEE BEFORE HIM. IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE TRADING ADDITION OF RS. 11,35,073/ - BY APPLYING HIGHER G.P. RATE OF 1.82%. THE ADDITION OF RS. 11,35,073/~ IS DELETED. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE TRADING RESULTS SHOWN - BY THE APPELLANT. THE GROUNDS RAISED IN THIS REGARD ARE ALLOWED. 7 . SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF ITO, WARD - 1(4), JODHPUR VS. SHRI SURENDRA KUMAR HUNDIA IN I.T.A.NO. 87/JU/2014 FOR THE A.Y. 2009 - 10 , SO BY RESPECTFULLY FOLLOWING THE ORDER DATED 23/05/2014 , WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 11 8 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 0 7 TH AUGUST , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07 TH AUGUST , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .