VANDANA JAIN, Jaipur V. ACIT, Jaipur

ITA 102/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2097 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: H M SINGHVI
• Keywords: Gross profit estimation; Rejection of books of accounts
• Section: 142(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.102/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 SMT. VANDANA JAIN, M/S TUSHAR HAND WORKS, 11, GANGWAL PARK, JAIPUR. CUKE VS. THE ACIT, CIRCLE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ACAPJ1433G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.103/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 SMT. VANDANA JAIN, M/S TUSHAR HAND WORKS, 11, GANGWAL PARK, JAIPUR. CUKE VS. THE ACIT, CIRCLE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ACAPJ1433G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRHDH VKSJ LS@ ASSESSEE BY : SHRI H.M. SINGHVI JKTLO DH VKSJ LS@ REVENUE BY : SHRI R. A. VERMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/05/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 25/05/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LD. CIT(A) -2, JAIPUR DATED 17.11.2015 FOR A.Y. 2011-12 & 2012-13 RESPECTIVELY. ITA NO. 102/JP/16 ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 2 THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A)-II WENT WRONG IN CONFIRMING THE ADDITION OF RS. 21,00,160/- BY APPLYING THE G.P. RATE OF 31% ESTIMATED BY AO WHICH IS ARBITRARY AND ILLEG AL. 2. THAT NO COMPARATIVE CASE WAS GIVEN BY AO. 3. THAT THE LEARNED CIT(A) WENT WRONG IN NOT APPREC IATING THE WORKING OF COST AND G.P. FOR 4 DIFFERENT ITEMS GIVEN TO AO AND TO CIT(A). 4. THAT THE LEARNED CIT(A)-II WENT WRONG IN CONFIRM ING THE DISALLOWANCE @ 10% ON ESTIMATED BASIS OF THE FOLLOWING EXPENSES:- I) RS. 16318/- OUT OF RS. 163181/- FOR POSTAGE & TE LEPHONE EXPENSES. II) RS. 13193/- OUT OF RS. 131929 FOR OFFICE, GENER AL, REPAIR AND MAINTENANCE EXPENSES. III) RS. 55153 OUT OF RS. 551531/- FOR TRAVELLING E XPENSES. 2. AT THE START OF THE HEARING, THE LD AR SUBMITTED THAT THE ASSESSEE WISHES TO TAKE THE FOLLOWING AMENDED GROUND OF APPE AL IN PLACE OF GROUND NO. 1, 2 & 3 TAKEN EARLIER AT THE TIME OF FILING OF APP EAL: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LEA RNED CIT(A) WENT WRONG IN CONFIRMING THE APPLICATION OF PROVISION OF SEC. 145(3) ESTIMATING THE G.P. RATE OF 31% AS AGAINST G.P. RATE OF 20.79% DECLARED BY THE ASSESSEE RESULTING AN ADDITION OF RS. 2100000/-, THE FACTS OF THE CASE ARE TOTALLY DIFFERENT FROM THE EARLIER ASSESSMENT YEARS 2008-09 TO 2010-11. 3. ON PERUSAL OF THE ABOVE, IT IS NOTED THAT THE AS SESSEE HAS CHALLENGED THE REJECTION OF BOOKS OF ACCOUNTS AND APPLICABILITY OF SECTION 145(3) AS WELL AS ESTIMATION OF G.P RATE BY THE ASSESSING OFFICER. T HE GROUND REGARDING THE REJECTION OF BOOKS OF ACCOUNTS AND APPLICABILITY OF SECTION 145(3) HAS BEEN TAKEN UP BEFORE THE LD CIT(A) AND BEING A PURELY LE GAL GROUND, THE SAME IS ADMITTED AFTER HEARING BOTH THE PARTIES. WE SHALL ACCORDINGLY CONSIDER THE ABOVE GROUND IN PLACE OF ORIGINAL GROUND NO. 1, 2 & 3. ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 3 4. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND EXPORTING OF READY MADE GARMENTS IN THE NAME AND STYLE OF M/S TUSHAR HAND WORKS FOR LAST MO RE THAN 25 YEARS. THE ACCOUNTS OF THE ASSESSEE ARE AUDITED U/S 44AB. ALL SALES, PURCHASES AND EXPENSES ARE DULY SUPPORTED AND VERIFIED. THERE IS NO CHANGE IN THE METHOD OF ACCOUNTING AND THE SAME WAS ACCEPTED BY THE DEPA RTMENT. BECAUSE THE NATURE OF BUSINESS, AND NUMEROUS AND VARIETY OF ART ICLES, NO STOCK REGISTER WAS MAINTAINED BY THE ASSESSEE SINCE BEGINNING. PHY SICALLY STOCK VERIFICATION IS DONE AT THE CLOSE OF THE YEAR AND CLOSING INVENT ORY OF RAW MATERIAL, STITCHING MATERIAL, ETC. AND FINISHED GOODS IS PREP ARED. THE CLOSING STOCKS OF RAW MATERIAL, STITCHING MATERIAL AND FINISHED GOODS HAVE BEEN VALUED AT COST OR MARKET VALUE WHICHEVER IS LOWER WHICH IS NORMALL Y ACCEPTED PRINCIPLE OF VALUATION OF STOCK. THE ASSESSEE FILED RETURN OF IN COME DECLARING INCOME OF RS. 2412810/-. THE CASE WAS SELECTED FOR SCRUTINY AND N OTICES U/S 143(2) AND 142(1) WERE ISSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED ALL THE EXPLANATIONS AND DETAILS WHI CH WERE ASKED BY THE AO AND BOOKS OF ACCOUNTS WERE PRODUCED. THE SAME WERE CHECKED BY THE AO ON TEST BASIS. NO SPECIFIC DEFECTS WERE POINTED. THE G P RATE DECLARED BY THE ASSESSEE WAS BETTER IN COMPARISON TO THE IMMEDIATEL Y PREVIOUS YEAR. THE ASSESSEE MANUFACTURED THESE GARMENTS WHICH ARE APPR OVED BY THE FOREIGN BUYERS. 4.1 THE REASONS MENTIONED BY THE AO FOR NOT ACCEPTI NG THE TRADING RESULTS ARE AS UNDER:- A) THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE CONTI NUOUSLY BEEN REJECTED IN THE PROCEEDING ASSESSMENT YEARS. B) THE ASSESSEE DOES NOT MAINTAIN THE STOCK REGISTE R. IN THE AUDIT REPORT IT WAS MENTIONED NO STOCK REGISTER IS MAINTAINED. IN S UCH CIRCUMSTANCES THE QUANTITY AND VALUE OF CLOSING STOCK CANNOT BE DETER MINED TO BE RELIABLE AND GENUINE. ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 4 C) THE ASSESSEE IS MANUFACTURING DIFFERENT ITEMS BA SED ON ORDER OF THE BUYER. D) NO PRODUCTION REGISTER IS MENTIONED. E) ORDERS OF THE PRECEDING YEARS HAVE BEEN CONFIRME D BY LEARNED CIT(A) AND THE DECISION OF AO TO REJECT THE BOOKS HAVE BEEN UP HELD BY THEM. 4.2 THE AO ISSUED A SHOW CAUSE FOR REJECTION OF BOO KS AND APPLICATION OF PROVISIONS OF SEC. 145(3). THE ASSESSEE SUBMITTED A DETAILED REPLY WHICH HAS BEEN REPRODUCED ON PAGE 4 OF THE AO ORDER. AFTER GO ING THROUGH THE SUBMISSIONS THAT THE FACTS OF EACH YEAR ARE DIFFERE NT AND COMPARISON WITH THE PAST YEAR IS NOT POSSIBLE, THE AO ONLY FOR THE REAS ON THAT NO STOCK REGISTER WAS MAINTAINED WANTED TO REJECT THE BOOKS OF ACCOUN TS AND APPLIED THE G.P. RATE OF 31% APPLIED BY CIT(A) IN A.Y. 2007-08 WHICH RESULTED IN AN ADDITION OF RS. 2100160/-. 4.3 THE LEARNED CIT(A) CONFIRMED THIS TRADING ADDIT ION OF RS. 2100160 MENTIONING AS UNDER:- THE FACT OF THE YEAR ARE SIMILAR TO THE FACTS OF A .Y. 2007-08, 2008-09, 2009- 10 & 2010-11. ALTHOUGH THE PRODUCT MIX MAY HAVE CHA NGED; YET THE ASSESSEE CONTINUES TO MANUFACTURE AND EXPORT READYMADE GARME NTS. THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY REASON FOR DECREASE IN G.P. RATE AS COMPARED TO THE (ABOVE) PRECEDING YEARS. THE APPELLANT HAS FURN ISHED THE COST OF FOUR ITEMS WHICH HAVE A LOWER GP RATE. IT IS NOT CLEAR W HETHER THESE FOUR ITEMS ARE REPRESENTATIVE SAMPLES OF THE PRODUCT MIX OF THE AP PELLANT OR ARE RANDOM ITEMS. IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWIN G THE ABOVE ORDERS OF THE CIT(A), THE TRADING ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING THE G.P. RATE @ 31% IS SUSTAINED. ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 5 THE LEARNED CIT(A) HAS NOT CONSIDERED FOUR EXAMPLES AND APPLIED THE RATE OF 31% AS MADE BY CIT(A) IN A.Y. 2007-08, 2008-09, 200 9-10 & 2010-11. 4.4 FURTHER THE ASSESSEE RELIES ON THE FOLLOWING JU DGMENTS:- 1. HONBLE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2008-09 , 2009-10 & 2010-11 WHEREIN THE SIMILAR ADDITION WAS MADE ON THE BASIS OF CIT(A) ORDER HAS BEEN DELETED IN APPEAL NO. 713&714/JP/2013 VIDE ORDER DA TED 18.12.2015 & APPEAL NO. 458/JP/2015 DATED 16.03.2016. 2. CIT V. A. KRISHNASWAMI MUDALIAR ( 53ITR 122(SC): - ACT DOES NOT CATER A MERE DISCRETIONARY POWER, IN T HE CONTEXT IMPOSES A STATUTORY DUTY ON THE AO TO EXAMINE IN VERY CASE TH E METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE AND TO SEE WHETHER OR NOT IT HAS REGULARLY EMPLOYED AND TO DETERMINE WHETHER THE INCREASE, PRO FITS AND GAIN OF THE ASSESSEE COULD BE PROPERLY DEDUCTED. 3. WHETHER THE PRESENCE OR ABSENCE OF STOCK REGISTE R IS MATERIAL OR NOT WOULD DEPEND UPON THE TYPE OF BUSINESS. DELHI HIGH COURT IN CIT V. SUPERIOR CRAFTS 353 ITR 101 AND POONAM RAM 326 ITR 223 HAS HELD THA T STOCK REGISTER NOT MUST. 4. PUNJAB AND HARAYANA HIGH COURT IN CASE OF PANDIT BROTHERS 26 ITR 159, PG 166-167 HAS HELD THAT THERE IS NO STOCK REGISTER ON LY CAUTION THE ASSESSING OFFICER AGAINST THE FALSITY OF THE RETURNS MADE BY THE ASSESSEE. HE CANNOT SAY THAT MERELY BECAUSE THERE IS NO STOCK REGISTER THE ACCOUNT BOOKS MUST BE FALSE. 5. ALLAHABAD HIGH COURT IN THE CASE OF RAM AVTAR AS HOK KUMAR V. CST (1980) 45 STC 366 HAS HELD THAT IN MAKING AS ASSESSMENT FO R A PARTICULAR YEAR THE ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 6 ACCOUNTS BOOKS FOR THAT YEAR ALONE TO BE CONSIDERED AS EACH ASSESSMENT YEAR IN INDEPENDENT. IT CANNOT BE MERELY ASSUMED THAT ME RELY BECAUSE FOR SOME REASON THE ACCOUNTS BOOKS IN THE EARLIER YEARS WAS REJECTED THESE STOOK CONDEMNED FOREVER. 6. MADRAS HIGH COURT IN THE CASE OF R.V.S. AND SONS DAIRY FARM V. CIT (257 ITR 764) HAS HELD THAT WHILE ESTIMATING PROFITS, EA CH YEAR IS AN INDEPENDENT UNIT FOR WHICH THE LIABILITY FOR TAX HAS TO BE DETE RMINED AND EVEN WHEN THE ASSESSEES ACCOUNTS BOOKS ARE NOT ACCEPTED, NEVER T HE LESS, THE EXAMINATION OF THE AVAILABLE DATA OR ESTIMATE FOR EACH YEAR SEP ARATELY WOULD HAVE TO BE CONSIDERED AND ONLY THEREAFTER THE LIABILITY DETERM INED. THE ESTIMATE TO BE DONE SHOULD BE IN RELATION TO THE FIGURES AVAILABLE FOR EACH YEAR AND MUST TAKE NOTE OF PRIOR RECORDS OF THE ASSESSEE AS WELL. 7. DELHI HIGH COURT IN THE CASE OF ACTION ELECTRICA LS V. DEPUTY CIT(258 ITR 188) HAS OBSERVED THAT THE ESTIMATION OF THE SALES AND GROSS PROFIT RATE WHICH WAS BASED ON PAST YEARS RESULTS COULD BE SAID TO BE ARBITRARY IN FRAMING A BEST JUDGMENT ASSESSMENT. 8. DELHI HIGH COURT IN THE CASE OF CIT V. JAS JACK ELEGANCE EXPORTS (324 ITR 95) AGREEING WITH THE FINDING OF ITAT DISMISSED THE APPEAL BY THE CIT, THE TRIBUNAL NOTED THAT THE ASSESSING OFFICER HAD NOT F OUND ANYDEFECT IN THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE. THE ASSES SEE WAS ALSO A GARMENT MANUFACTURER AND EXPORTER. NO STOCK REGISTER WAS MA INTAINED IN THE PAST AND ALSO IN THE YEAR UNDER APPEAL. IN THE ABSENCE OF AN Y DEFECT THE ITAT CONFIRMED THE FINDINGS RECORDED BY CIT(APPEAL). 5. WE NOW REFER TO THE FINDING OF THE CIT(A) WHICH IS REPRODUCED AS UNDER :- ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 7 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSES SMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSEE IS ENGAG ED IN THE MANUFACTURE AND EXPORT OF READYMADE GARMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAD NOT MAINTAINED STOCK REGISTER AND ALSO HAD NOT MAINTAINED QUANTITATIVE AND QUALIT ATIVE DETAILS OF OPENING STOCK AND CLOSING STOCK. IT WAS ALSO SEEN THAT THE EXPENDITURE UNDER THE HEAD- STITCHING, EMBROIDERY, DYING AND PRINTING AND PACKA GING EXPENDITURE WAS HIGH. ON THE BASIS OF THE ABOVE DEFECTS, THE ASSESS ING OFFICER REJECTED THE BOOKS OF ACCOUNT U/S 145(3) AND APPLIED THE GP RATE OF 31% WHICH HAD BEEN SUSTAINED BY THE CIT(A) IN THE CASE OF THE ASSESSEE , FOR A.Y. 2007-08. SUBSEQUENTLY, ALSO FOR A.Y. 2008-09, A.Y. 2009-10 A ND A.Y. 2010-11, THE CIT(A) HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) AND HAVE ESTIMATED THE GP RATE AT 31% AS IN A.Y. 2007-08. TH E APPELLANT HAS STATED THAT IT IS MANUFACTURING DEFERENT PRODUCTS EVERY YE AR AND IN A.Y. 2007-08, THE BOOK RESULT OF THE ASSESSEE ITSELF SHOWED A GP RATE IN EXCESS OF 30% AGAINST WHICH THE CIT(A) SUSTAINED AN ADDITION OF ONLY RS. 30,381/- BY APPLYING GP RATE OF 31%. THEREAFTER, IN A.Y. 2008-09, THE CIT(A )-II , JAIPUR ( IN APPEAL NO. 239/10-11) HAS HELD AS UNDER- ASSESSING OFFICER REJECTED THE BOOKS RESULTS UNDER SECTION 145(3) OF THE GROUND THAT APPELLANT DID NOT MAINTAIN DAY-TO-DAY S TOCK REGISTER AND PROPER VOUCHERS FOR EXPENSES. ASSESSING OFFICER ALSO RELIE D UPON SEVERAL JUDICIAL DECISIONS WHICH ARE DIRECTLY APPLICABLE TO THE FACT S OF THE APPELLANTS CASE. AS AGAINST THIS, APPELLANT SUBMITTED THAT BOOK RESULTS CANNOT BE REJECTED MERELY ON FALL IN GP AND IN SUPPORT OF THIS CONTENTION, AP PELLANT SUBMITTED CERTAIN JUDICIAL DECISIONS. HOWEVER ON A PLAIN READING OF A SSESSMENT ORDER AND APPELLANTS SUBMISSION, THERE IS NO DOUBT THAT THE MAINTENANCE OF BOOKS OF ACCOUNT, VOUCHERS AND S STOCK REGISTER CLEARLY WARR ANTS REJECTION OF BOOKS RESULTS. ACCORDINGLY, ASSESSING OFFICER IS JUSTIFIE D IN NOT ACCEPTING THE ASSESSEES BOOKS RESULT. THE BOOK RESULT REJECTED U NDER SECTION 145(3) AS ACCORDINGLY CONFIRMED. AFTER REJECTING THE BOOKS RESULTS, NEXT QUESTION IS ESTIMATION OF GROSS PROFIT. APPELLANT SUBMITTED VARIOUS REASONS FOR ALL IN GP S UCH AS- EXPORT SALES OF DIFFERENT SALE IS COMPLETELY VOUCHED AND THERE IS N O DEFECT FOUND IN THE SAME. SALE PRICE IS NEGOTIATED WITH THE CUSTOMER AND THER EFORE IT CAN BE DIFFERENT RESULTING IN LOW GP. HOWEVER APPELLANT DID NOT SUBM IT ANY EVIDENCE AS TO HOW COST OF RAW MATERIAL ETC HAS INCREASED MORE AS COMP ARED TO REALIZATION FROM ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 8 SALES. THERE CAN BE FALLING GP ONLY WHEN SALE PRICE INCREASES LESS AS COMPARED TO INCREASE IN INPUT COST. APPELLANT HAS NOT DEMONS TRATED ANY SUCH VARIATION IN HER SUBMISSION. IN THE ABSENCE OF DIFFERENCE IN RISE COST AND REALIZATION, IT CANNOT BE SAID THAT ALL IN GP IS JUSTIFIED. THE ARG UMENTS GIVEN BY THE APPELLANT ARE GENERAL AND THEY ARE ONLY RELATING TO SALES SID E WHEREAS GP IS COMPUTED AFTER REDUCING DIRECT COST. IN THE ABSENCE OF ANY M ATERIAL OR INFORMATION WITH RESPECT TO DISPROPORTIONATE RISE IN COST IT CANNOT BE SAID THAT FALL IN GROSS PROFIT IS JUSTIFIED. IN ASSESSMENT YEAR 2007-08, APPELLANT ACCEPTED GROSS PROFIT AT 31% CONFIRMED BY CIT(A). I DO NOT FIND ANY CHANGES IN CIRCUMSTANCES WHICH MY A RESULT IN FALL IN GROSS PROFIT DURING THIS YEA R AS COMPARED TO LAST YEAR. ACCORDINGLY I FIND THAT THE GROSS PROFIT AT 31% EST IMATED BY THE AO ON THE BASIS OF GP ACCEPTED BY THE APPELLANT LAST YEAR IS CORRECT. THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GROSS PROFIT IS CONFIRMED. THE FACTS OF THIS YEAR ARE SIMILAR TO THE FACTS OF A.Y. 2007-08, 2008-09, 2009- 10 & 2010-11. ALTHOUGH, THE PRODUCT MIX MAY HAVE CH ANGED, YET THE ASSESSEE CONTINUES TO MANUFACTURE AND EXPORT READYMADE GARME NTS. THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY REASON FOR DECREASE IN GP RATE, AS COMPARED TO THE (ABOVE) PRECEDING YEARS. THE APPELLANT HAS FURN ISHED THE COST OF OUR ITEMS ARE REPRESENTATIVE SAMPLES OF THE PRODUCT MIX OF THE APPELLANT OR ARE RANDOM ITEMS. IN VIEW OF THE ABOVE DISCUSSION AND F OLLOWING THE ABOVE ORDERS OF THE CIT(A), THE TRADING ADDITION MADE BY THE AS SESSING OFFICER BY ESTIMATING THE GP RATE AT 31% IS SUSTAINED. THIS GR OUND IS DISMISSED. 6. IT IS NOTED THAT THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR FOR A.Y. 2008-09& 2009-10 IN ITA NO. 713 &714/JP/2013 DATED 18.12.2015 UNDER IDENTICAL FACTS, HAS UPHELD THE BOOKS OF ACCOUNTS A ND DELETED THE TRADING ADDITION AND HELD AS UNDER:- 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGES THAT THE ASSESSEE I S A 100% EXPORTER OF THE READYMADE GARMENTS AND BOOKS OF ACCOUNT ARE DULY AU DITED AND SUPPORTED BY RECORDS. THERE IS NO ADVERSE COMMENTS ABOUT THE TRA NSACTIONS, EXPENDITURE AND STOCK MAINTENANCE, COMPARATIVE STOCK INVENTORY PREPARED BY THE ASSESSEE IS BASED ON THE RECORD AND LOWER AUTHORITI ES HAVE NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE VALUATION OF THE CLOSIN G STOCK AND ITEMS. IN OUR CONSIDERED VIEW, THE BOOKS OF ACCOUNT OF THE ASSESS EE CANNOT BE REJECTED IN ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 9 SUCH CASUAL MANNER AND SUMMARY MANNER. WE FIND MERI T IN THE ARGUMENTS OF THE LD. AR OF THE ASSESSEE THAT MAINTENANCE OF DAY TODAY PRODUCTION STOCK IN THE READYMADE GARMENTS TRADE IS IMPOSSIBLE TO BE MA INTAINED BY THE ASSESSEE. ADVERSE INFERENCE DRAWN ABOUT THE EXPENSE S UNDER THE HEAD STITCHING, EMBROIDERY, DYING AND PRINTING BEING HIG H HAVE NEITHER BEEN JUSTIFIED LD. AO NOR ANY DISPROPORTIONNESS IN COMPA RATIVE FIGURE HAS BEEN DEMONSTRATED. THUS IN OUR VIEW, THE BOOKS OF ACCOUN T OF THE ASSESSEE ARE NOT LIABLE TO BE REJECTED. OUR VIEW ARE FORTIFIED BY TH E FOLLOWING DECISIONS: (I) CIT V. SUPERIOR CRAFTS, 353 ITR 101 AND POONA R AM 326 (DEL.) (II) PANDIT BROTHERS 26 ITR 159 (P&H) (III) CIT VS. JAS JACK ELEGANCE EXPORTS, 324 ITR 95 (DEL.) IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE B OOKS OF ACCOUNT CANNOT BE REJECTED. BESIDES, IN ASSESSMENT YEAR 2007-08, SUBS TANTIAL GROSS PROFIT ADDITION WAS REDUCED BY THE LD. CIT(A) ON SAME FACT S AND CIRCUMSTANCES OF THE CASE TO A MEAGRE FIGURE. THE REASON FOR FALL IN ASSESSEES GROSS PROFIT CANNOT BE BRUSHED ASIDE. THE FACT IS THAT THERE IS A STIFF COMPETITION IN THE GLOBAL MARKET AND IT IS A BUYER MARKET WHICH CANNOT BE DISPUTED. IN VIEW OF THESE DELIBERATIONS, WE SEE NO JUSTIFICATION IN MAK ING ANY GROSS PROFIT ADDITION. THUS WE DO NOT ENDORSE THE REJECTION OF B OOKS OF ACCOUNT AND THERE IS NO JUSTIFICATION IN ESTIMATION OF ANY GROSS PROF IT ADDITION. THE GROUND RAISE IN THIS BEHALF BY THE ASSESSEE IN BOTH THE YEARS AR E ALLOWED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS REJECTED THE BOOKS OF ACCOUNTS HOLDING THAT FIRSTLY, THE BOOKS OF ACCOUNTS HAVE CONTINUOUSLY BEEN REJECTED I N THE EARLIER YEARS AND SECONDLY, THE ASSESSEE IS NOT MAINTAINING STOCK REG ISTER. IN THE EARLIER YEARS, THE MATTER HAD COME UP BEFORE THE COORDINATE BENCHE S AND THE BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED. GIVEN THAT THERE ARE CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, RESPECTFULLY FOLLOWING T HE ORDERS PASSED BY THE COORDINATE BENCHES IN EARLIER YEARS, THE BOOKS OF A CCOUNTS CANNOT BE REJECTED. REGARDING ESTIMATION OF G.P RATE, THE ASS ESSEE HAS DISCLOSED A G.P RATE OF 20.79% AS AGAINST G.P RATE OF 19.87% IN AY 2010-11 AND 21.09% IN AY 2009-10. THE AO HAS STATED THAT THERE IS SET HI STORY IN THE CASE OF ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 10 ASSESSEE WHERE G.P RATE OF 31% HAS BEEN APPLIED AND ALSO UPHELD BY THE LD CIT(A) AND ACCORDINGLY, HE SUBSTITUTED THE G.P RATE OF 20.79% DISCLOSED BY THE ASSESSEE WITH G.P RATE OF 31%. IN THE EARLIER YEARS, THE G.P RATE OF 31% HAS NOT BEEN ACCEPTED BY THE COORDINATE BENCHES AND THE G.P RATE OFFERED BY THE ASSESSEE WAS ACCEPTED. IN LIGHT OF ABOVE, FOLL OWING THE ORDERS OF THE COORDINATE BENCHES AND THE ASSESSEES PAST HISTORY, WE DONOT SEE ANY JUSTIFICATION FOR AO TO INTERFERE WITH THE G.P RATE OF 20.79% OFFERED BY THE ASSESSEE. IN THE RESULT, ADDITION OF RS 21,00,160 IS HEREBY DELETED. IN THE RESULT, GROUND OF THE ASSESSEE IS ALLOWED. 8. NOW, COMING TO GROUND NO. 2 OF THE ASSESSEES APPE AL, THE DISALLOWANCE WERE MADE BY THE ASSESSING OFFICER TOWARDS TRAVELLI NG, POSTAGE, TELEPHONE, OFFICER REPAIR AND MAINTENANCE, ETC HOLDINGTHAT THE SE WERE NOT FULLY SUPPORTED BY PROPER BILLS AND ALSO DUE TO THE PERSONAL ELEMEN T IN THESE EXPENDITURE. THE LD CIT(A) FOUND THE DISALLOWANCE TOWARDS TRAVELLING EXPENSES AT 15% IS ON THE HIGHER SIDE AND RESTRICTED IT TO 10% AND REST ALL D ISALLOWANCES WERE CONFIRMED. WE DONOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A) AND THE SAME IS HEREBY CONFIRMED. IN THE RESULT, THE ASSES SEE GROUND IS DISMISSED. ITA NO. 103/JP/16 9. IDENTICAL GROUNDS OF APPEAL HAVE BEEN TAKEN BY THE ASSESSEE REGARDING REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF G. P RATE BY THE AO @ 31% AS AGAINST G.P RATE OF 23.71% DISCLOSED BY THE ASSE SSEE ON TURNOVER OF RS 2,49,36,610. SIMILARLY, THE GROUND NO. 2 RELATE S TO DISALLOWANCE OF TRAVEL EXPENSES. UNDISPUTEDLY, THERE ARE NO CHANGES IN TH E FACTS AND CIRCUMSTANCES OF THE CASE VIS-A-VIS THE FACTS AND CIRCUMSTANCES A S DISCUSSED IN ITA NO. 102/JP/2016. OUR FINDINGS AND DIRECTIONS CONTAINED THEREIN SHALL ACCORDINGLY ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 11 APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL. IN THE RESULT, GROUND NO. 1 IS ALLOWED AND GROUND NO. 2 OF ASSESSEES APPEAL IS DI SMISSED. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 25/05/2017 VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. VANDANA JAIN, M/S TUSHAR HAND WORKS, 11, GANGWAL PARK, JAIPUR . 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 102 &103/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR. ITA NO. 102&103/JP/16 SMT. VANDANA JAIN VS ACIT,CIRCLE -5,JAIPUR 12