The ACIT, Indore V. M/s. Khandewal Agencies Pvt. Ltd., Indore

ITA 103/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2705 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Additional evidence
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI B.R.KAUSHIK, ACCOUNTANT MEMBER PAN NO. : AABCK7095H I.T.A.NO. 103/IND/2010 A.Y. : 2005-06 ACIT, KHANDELWAL AGENCIES PVT.LTD., 4(1), VS 86, TARADEVI ROAD, INDORE. SIYAGANJ, INDORE. APPELLANT RESPONDENT C.O.NO.04/IND/2010 (ARISING OUT OF I.T.A.NO. 103/IND/2010) A.Y. : 2005-06 KHANDELWAL AGENCIES PVT.LTD., ACIT, 86, TARADEVI ROAD, VS 4(1), SIYAGANJ, INDORE. INDORE. CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI P.K.MITRA, SR. DR ASSESSEE BY : SHRI AJAY TULSIYAN, C. A. O R D E R PER B. R. KAUSHIK, A.M. - 2 - 2 THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAIN ST THE ORDER DATED 7 TH DECEMBER, 2009 OF THE LD.CIT(A) AND THE ASSESSEE H AS FILED CROSS OBJECTION. 2. GROUND NOS. 1 & 4 OF THE APPEAL OF THE DEPARTMENT ARE GENERAL IN NATURE. 3. GROUNDS NO. 2 & 3 OF THE REVENUES APPEAL ARE REPR ODUCED BELOW :- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN REDUCING THE TURNOVER FROM RS. 6 CRORE TO 5 CRORES ADDITION MADE BY THE ASSESSING OFFICER BY REJECTING THE BOOK RESULT AND ESTIMATED SALES RS. 1,29,41,946/- AS AGAINST THE RETURNED SAL ES OF RS. 4,70,58,054/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN APPLYING THE NET PROFIT RATE 1.2 5 % AS AGAINST @ 3 % APPLIED BY THE ASSESSING OFFICER. 4. GROUNDS NO. 1, 2 & 3 OF THE CROSS OBJECTIONS OF TH E ASSESSEE ARE ALSO REPRODUCED BELOW :- 1. THAT THE LD.CIT(A) ERRED IN UPHOLDING THE AOS DECI SION OF REJECTING THE BOOK RESULT WHICH ON THE FACTS AND IN THE - 3 - 3 CIRCUMSTANCES OF THE CASE OUGHT TO BE ACCEPTED AND THE SAME NOW REQUIRES TO BE ACCEPTED. 2. THAT THE LD.CIT(A) ERRED IN ESTIMATING SALES AT RS. 5,00,00,000/- ARBITRARILY AGAINST THE RETURNED SALE S OF RS. 4,70,58,054/-, THEREBY MAKING AN ADDITION OF RS. 29 ,41,946/- IN THE SALES ACCOUNT WHICH ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IS ILLEGAL AND WRONG. 3. THAT THE LD.CIT(A) ERRED IN ESTIMATING NET PROFIT R ATE @ 0.5 % ON CONSIGNMENT SALES OF RS. 2,77,00,000/- AND NET PROFIT RATE @ 1.25 % ON TOTAL ESTIMATED SALES OF RS. 5,00, 00,000/- THEREBY ESTIMATING TOTAL NET PROFIT AT RS. 7,63,500 /- ARBITRARILY AGAINST THE DECLARED NET PROFIT OF RS. 1,06,660/- 5. GROUND NO. 4 OF THE CROSS OBJECTION IS GENERAL IN NATURE. 6. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE FILED RE TURN OF INCOME ON 28 TH OCTOBER, 2005, DECLARING TOTAL INCOME OF RS. 1,06, 660/-. THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE TUR NOVER OF THE ASSESSEE AT RS. 6 CRORES AS AGAINST THE DECLARED SALES OF RS . 4,70,58,054/- TAKING NET PROFIT @ 3 %. THE AO DETERMINED TOTAL INCOME OF THE ASSESSEE AT RS. 18 LAKHS AND, THUS, MADE THE ADDITION OF RS. 16,93,340 /-. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FILED O N 18 TH AUGUST, 2008, AND REPRODUCED IN PARA 3 OF THE IMPUGNED ORDER REDU CED THE SALES TO RS. 5 - 4 - 4 CRORES AND APPLIED NET PROFIT OF 1.25 %. THE TOTAL INCOME WAS, THUS, REDUCED BY THE LD. CIT(A) TO RS. 7,63,500/- AND, TH US, HE CONFIRMED THE ADDITION OF RS. 6,56,840/-. THE DEPARTMENT IS IN AP PEAL AGAINST THE RELIEF ALLOWED BY THE LD.CIT(A) AND THE ASSESSEE HAS FILE D CROSS OBJECTION AGAINST THE ORDER OF THE LD.CIT(A) AS PER GROUNDS DISCUSSED ABOVE. 7. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. SENIOR D.R. RELIED ON THE ASSESSMENT ORDER AND SUBMITTED THAT T HE SALES SHOWN BY THE ASSESSEE COULD NOT BE RECONCILED BY THE SALES TAKE N BY THE SALES TAX AUTHORITIES AND THE AO NOTICED THE FACTS IN THE BOO KS OF ACCOUNT. HE, THEREFORE, SUBMITTED THAT IN ABSENCE OF PROPERLY MA INTAINED BOOKS OF ACCOUNT AND NON-MAINTENANCE OF DAY TO DAY STOCK PAR TICULARS, THE AO WAS JUSTIFIED IN ESTIMATING THE SALES AT RS. 6 CRORES. HE ALSO SUBMITTED THAT THE AO COMPARED THE EXPENSES CLAIMED BY THE ASSESSEE FO R THE PERIOD RELEVANT TO ASSESSMENT YEAR 2005-06 WITH THE EXPEND ITURE CLAIMED FOR FINANCIAL YEAR 2002-03 AND 2003-04. SINCE THE ASSES SEE HAS CLAIMED EXCESSIVE EXPENSES COMPARED TO THE INCREASE IN SHAR E OVER EARLIER YEARS, THE AO WAS JUSTIFIED IN TAKING THE NET PROFIT @ 3% OF THE ESTIMATED SALES OF RS. 6 CRORES. IT WAS ALSO SUBMITTED THAT RECONCI LIATION OF THE SALES TAKEN BY THE LD. CIT(A) COULD NOT BE DONE WITH THE SALES SHOWN IN THE PROFIT AND LOSS ACCOUNT FILED WITH THE RETURN OF INCOME AND TH E LD.CIT(A) WAS, THEREFORE, NOT JUSTIFIED IN REDUCING THE ESTIMATED SALES TO RS. 5 CRORES AND - 5 - 5 IN VIEW OF THE DEFECTS IN THE BOOKS OF ACCOUNT NARR ATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 23 RD NOVEMBER, 2007, THE LD.CIT(A) WAS NOT JUSTIFIED IN REDUCING THE NET PROFIT RATE T O 1.25 % OF THE ESTIMATED SALES. 8. THE LD.COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTI ON TO THE DOCUMENTS FILED IN THE PAPER BOOK DATED 15 TH JUNE, 2010. HE ALSO FILED SYNOPSIS OF THE WRITTEN SUBMISSIONS AND SUBMITTED T HAT (I) THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT, BECAUSE THE ASSESSEE WAS DEALING IN STEEL TUBES, PIPE FITTINGS AND ALLIED ITEMS ON RETAIL AND IN WHOLESALE BASIS AND WAS ALSO ENGAGED IN CONSIGNMENT SALES OF THESE ITEMS ON WHICH COMMISSION WAS EARNED AND DECLARED AS INCOME. THE ASSESSEE WAS HAVING TWO BRANCHES AT JALGAON AND INDORE AND SEPARATE BOOKS OF ACCOUNT WERE MAINTAINED, BUT LOOKING TO THE NATURE OF THE BUSINESS OF THE ASSESSEE, IT WAS NOT POSSIBLE TO MAINTAIN DAY TO DAY STOCK REGISTER. (II) THE LD.COUNSEL FOR THE ASSESSEE WRONGLY SUBMITTED BEFORE THE LOWER AUTHORITIES THAT THE ASSESSEE HAS ARRIVED AT CLOSING STOCK ON THE - 6 - 6 BASIS OF GROSS PROFIT AND NOT MAINTAINED STOCK INVENTORY. (III) THE SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WERE DRAWN, BECAUSE SEPARATE SALES TAX RETURNS WERE FILED AT INDORE AND JALGAON AND AT THE END OF THE YEAR, THE CONSOLIDATED BALANCE SHEET WAS PREPARED FOR COMPANIES ACT AND INCOME TAX PURPOSES. (IV) THE SALES WERE RECONCILED BEFORE THE AO WITH REFERENCE TO SALES TAX ORDERS AND THE TRADING ACCOUNT FILED WITH THE RETURN OF INCOME AND NO DISCREPANCY WAS DISCOVERED. (V) THE LD.CIT(A) ADMITTED ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, WHICH WERE FORWARDED TO THE AO ON 21 ST AUGUST, 2008, AND THE AO SUBMITTED REMAND REPORT ON 26 TH NOVEMBER, 2009. THE RELEVANT EVIDENCE AND REMAND REPORT OF THE AO ARE PLACED AT PAGES 82, 83, 106, 107,116 AND 118 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE LD.CIT(A) HAS ERRONEOUSLY UPHELD THE REJECTION - 7 - 7 OF BOOKS OF ACCOUNT U/S 145 OF THE ACT AND ESTIMATED THE TURNOVER AT RS. 5 CRORES AND NET PROFIT @ 1.25 % AND NET PROFIT @ 0.5% ON CONSIGNMENT SALES OF RS. 2.77 CRORES. (VI) THE RELEVANT DETAILS WERE FILED BEFORE THE LOWER AUTHORITIES ALONGWITH SUPPORTING DOCUMENTS AND THERE WAS NO JUSTIFICATION FOR REJECTION OF BOOKS OF ACCOUNT IN VIEW OF THE FACT THAT DAY TO DAY STOCK REGISTER WAS NOT POSSIBLE LOOKING TO THE NATURE OF THE BUSINESS OF THE ASSESSEE, BUT INVENTORIES OF STOCK WERE FILED FOR VARIOUS VARIETIES OF STOCK AND THE VALUE OF THE CLOSING STOCK WAS CALCULATED CORRECTLY (VII) NO SERIOUS DEFECT WAS FOUND BY THE LOWER AUTHORITIES IN THE BOOKS OF ACCOUNT, TO WARRANT THE REJECTION THEREOF. (VIII) THE BOOKS OF ACCOUNT WERE AUDITED UNDER THE COMPANIES ACT AND REPORT U/S 44AB OF THE INCOME-TAX ACT,1961. WAS ALSO FILED. (IX) PURCHASE AND SALES REGISTER WERE MAINTAINED AND PRODUCED BEFORE THE LOWER AUTHORITIES AND - 8 - 8 OPENING AND CLOSING STOCK INVENTORIES WERE AVAILABLE ON RECORD ALONGWITH OTHER RELEVANT DETAILS AS COULD BE SEEN AT PAGES 5 TO 7, 34 TO 49, 111, 116 & 101 TO 104 AND 117 TO 118 OF THE PAPER BOOK. THE BOOK RESULTS OF THE ASSESSEE WERE, THEREFORE, ERRONEOUSLY REJECTED BY THE LOWER AUTHORITIES. (X) THERE WAS NO BASIS FOR THE AO TO ADOPT THE SALES AT RS. 6 CRORES AND THE LD.CIT(A) HAS ALSO NOT GIVEN ANY REASON FOR TAKING THE SALES AT RS. 5 CRORES AS AGAINST SALES DECLARED AT RS. 4.71 CRORES APPROXIMATELY. THE TURNOVER HAS, THUS, BEEN ESTIMATED ARBITRARILY AND THERE WAS NO DOCUMENTS OR EVIDENCE TO PROVE THAT THE ASSESSEE HAD NOT FULLY RECORDED ITS SALES OR PURCHASES. (XI) IN PARA 4.1 OF THE IMPUGNED ORDER, THE LD.CIT(A) HAS ACCEPTED THAT THE GROSS SALES INCLUDED CONSIGNMENT SALES AS PER THE BOOKS OF ACCOUNT AND SALES DECLARED AT RS. 7.48 CRORES WERE FAR IN EXCESS OF THE GROSS SALES ESTIMATED - 9 - 9 BY THE ASSESSING OFFICER AND, THUS, THE LD.CIT(A) WAS NOT CORRECT IN ESTIMATING THE SALES AT RS. 5 CRORES AS AGAINST RS. 478.50 LAKHS SHOWN BY THE ASSESSEE. (XII) THE COPIES OF SALES TAX RETURNS AND THE ORDERS WERE FILED BEFORE THE LOWER AUTHORITIES ALONGWITH RECONCILIATION STATEMENT. THE COPIES OF THE RELEVANT DOCUMENTS ARE PLACED AT PAGES 84 TO 100 OF THE PAPER BOOK AND THE SALES TAX AUTHORITIES HAD ACCEPTED THE SALES. THE AO AND THE LD.CIT(A) HAVE ALSO NOT FOUND ANY DEFECT IN THE RECONCILIATION STATEMENT PREPARED ON THE BASIS OF SALES TAX ORDER AND THE BOOKS OF ACCOUNT OF THE ASSESSEE. (XIII) THERE WAS NO BASIS FOR ADOPTING THE NET PROFIT @ 3 % BY THE ASSESSING OFFICER AND REDUCTION THEREOF @ 1.25% BY THE LD. CIT(A), BECAUSE THE BOOK RESULTS FOR THE FINANCIAL YEAR IN QUESTION WERE BETTER THAN EARLIER YEARS LOOKING TO INCREASE IN TURNOVER, AS COULD BE SEEN FROM THE COMPARATIVE CONSOLIDATED TRADING AND PROFIT AND - 10 - 10 LOSS ACCOUNT FILED AT PAGE 58 OF THE PAPER BOOK, WHEREIN THE GROSS PROFIT FOR FINANCIAL YEAR 2002-03, 2003-04 AND 2004-05 WAS @ 4.37 %, 6.05 % AND 5.93 % RESPECTIVELY, AS AGAINST APPROXIMATE SALES OF RS. 2.59 CRORES, RS. 2.16 CRORES AND RS. 4.71 CRORES. THUS, THE GROSS PROFIT FOR THE YEAR UNDER CONSIDERATION WAS MORE THAN THE GROSS PROFIT OF FINANCIAL YEAR 2002-03 AND SLIGHTLY LESS THAN THAT FOR FINANCIAL YEAR 2003-04, WHICH WAS JUSTIFIED, BECAUSE THE TURNOVER FOR THE YEAR UNDER CONSIDERATION WAS MORE THAN DOUBLE THAN THAT OF FINANCIAL YEAR 2003-04. (XIV) THE AO HAD NO JUSTIFICATION TO REJECT THE BOOKS OF ACCOUNT AND ADOPT THE NET PROFIT ON THE BASIS OF INCREASE IN EXPENDITURE OVER THE EXPENDITURE IN EARLIER YEARS, BECAUSE THE TURNOVER HAS DOUBLED AND THE INCREASE IN EXPENDITURE OVER EARLIER YEARS, WAS BECAUSE OF THE FACT THAT THE TURNOVER HAS DOUBLED AND THAT THE INCREASE IN - 11 - 11 EXPENDITURE WAS MAINLY BECAUSE OF INCREASED EXPENDITURE ON SALES TAX AND INTEREST. (XV) IT MAY BE SEEN FROM THE COMPARATIVE PROFIT AND LOSS ACCOUNT AT PAGES 58 OF THE PAPER BOOK THAT THE SALES TAX PAID DURING THE YEAR UNDER CONSIDERATION WAS RS. 7,05,915/- AS AGAINST RS. 1,25,323/- AND RS. 41,436/- IN EARLIER TWO YEARS. SIMILARLY, THE EXPENDITURE ON BANK INTEREST AND OTHER INTEREST WAS RS. 4,56,220/- AS AGAINST RS. 2,88,365/- AND RS.1,77,679/- IN EARLIER TWO YEARS. (XVI) THE REJECTION OF BOOKS OF ACCOUNT WAS ALSO NOT JUSTIFIED, BECAUSE THE AO HAS ONLY COMPARED THE INCREASE IN EXPENDITURE, BUT FAILED TO POINT OUT ANY EXPENDITURE, WHICH WAS NOT FOR THE PURPOSE OF BUSINESS. SINCE THE EXPENDITURE HAS BEEN ACCEPTED TO BE GENUINE, THE ADDITION ON ACCOUNT OF NET PROFIT COULD NOT BE JUSTIFIED. 9. WE HAVE CAREFULLY CONSIDERED THE ISSUE, IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MATERIALS PLACED ON RECORD A ND RIVAL SUBMISSIONS. THE ASSESSEE HAS RELIED ON THE DECISION IN THE CASE OF CIT VS. GAUTAM - 12 - 12 LIME KHANIJ UDYOG, 256 ITR 243 (RAJ), WHEREIN IT HA S BEEN HELD THAT MERE REJECTION OF THE BOOKS OF ACCOUNT U/S 145 OF T HE INCOME-TAX ACT,1961, NEED NOT NECESSARILY LEAD TO THE ADDITION TO THE RETURNED INCOME IN ABSENCE OF ANY FINDING OF THE LD.CIT(A) THAT THE EXPENSES CLAIMED BY THE ASSESSEE WERE UNREASONABLE OR EXCESSIVE. IT IS VERY CLEAR FROM THE FACTS DISCUSSED ABOVE THAT THE LOWER AUTHORITIES HA D NOT GIVEN ANY JUSTIFICATION FOR REJECTING THE SALES DECLARED BY T HE ASSESSEE AND ESTIMATION OF THE SALES MADE BY THEM. AS DISCUSSED ABOVE, THE GROSS PROFIT DURING THE YEAR WAS 5.93 % AS AGAINST 4.37 % AND 6.05 % DECLAR ED FOR FINANCIAL YEAR 2002-03 AND 2003-04. SUBMISSION OF THE ASSESSEE THA T SLIGHT FALL IN GROSS PROFIT AS COMPARED TO THE GROSS PROFIT RATE OF FI NANCIAL YEAR 2003-04 WAS BECAUSE THE SALES DURING THE YEAR WERE MORE THAN DO UBLE THE SALES OF EARLIER YEARS AND THE SUBMISSION THAT THE INCREASED EXPENDITURE WAS MAINLY BECAUSE OF MORE LIABILITY OF SALES TAX AND I NTEREST AS DISCUSSED ABOVE, ARE ALSO FOUND TO BE CORRECT. THE ASSESSEE W ITH REFERENCE TO THE SALES TAX ORDERS HAS ESTABLISHED THAT THE SALES SHO WN TO THE INCOME TAX DEPARTMENT WERE DULY RECONCILED WITH THE SALES TAKE N BY THE SALES TAX AUTHORITIES AND THE TURNOVER ALSO INCLUDED CONSIGNM ENT SALES. THE LD.CIT(A) ALSO HAS OBSERVED THAT THE AO GROSSLY FAI LED TO TAKE NOTE OF THE MATERIAL FACT THAT APART FROM REGULAR SALES DISCLOS ED AT RS. 4,70,58,054/-, THE ASSESSEE HAD DISCLOSED COMMISSION OF RS. 2,08,6 04/- ON CONSIGNMENT - 13 - 13 SALES AGGREGATING TO RS. 2,76,99,671/- FOR BOTH THE BRANCHES AT INDORE AND JALGAON AND THE GROSS SALES AFTER DISCOUNT INCLUDIN G CONSIGNMENT SALES AS PER THE BOOKS OF ACCOUNT WERE RS. 7,48,35,125/-, WH ICH WAS FAR IN EXCESS OF GROSS SALES ESTIMATED BY THE ASSESSING OFFICER I N THE ASSESSMENT ORDER. THE AO IN HIS REMAND REPORT COULD NOT POINT OUT ANY DISCREPANCY IN THE RECONCILIATION STATEMENT FILED ON THE BASIS OF SALE S TAX ORDER. HE HAS POINTED OUT THAT THERE WERE DIFFERENCE IN DEBTORS A ND CREDITORS AND CLOSING STOCK AS PER THE STATEMENT AND AS PER BALANCE SHEET , BUT DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT THE DIFFERENCE WAS NOMINAL. HE ALSO OBSERVED THAT BOOKS OF ACCOUNT WERE PRODUCED, BUT T HEY WERE NOT SUPPORTED BY PROPER BILLS AND VOUCHERS AND STOCK SA LES AND PURCHASE REGISTERS WERE NOT PRODUCED. IN VIEW OF THE DEFECTS POINTED OUT BY THE ASSESSING OFFICER, IN OUR CONSIDERED OPINION, THE R EJECTION OF BOOKS OF ACCOUNT IS JUSTIFIED AS PER PROVISIONS OF SECTION 1 45 OF THE INCOME-TAX ACT,1961. HOWEVER, AFTER REJECTING THE BOOKS OF ACC OUNT, THE AO IS REQUIRED TO ESTIMATE THE INCOME IN THE MANNER OF BE ST JUDGMENT ASSESSMENT. SINCE NEITHER THE AO NOR THE LD.CIT(A) HAVE GIVEN ANY REASON FOR ESTIMATING THE TURNOVER AT RS. 6 CRORES AND RS./ 5 CRORES RESPECTIVELY AND HAVE NOT POINTED OUT ANY EXPENDITU RE, WHICH WAS NOT FOR THE PURPOSE OF BUSINESS, THE ESTIMATION OF TURN OVE R AND ADOPTION OF NET PROFIT WAS NOT JUSTIFIED IN VIEW OF THE DISCUSSION ABOVE. IT IS ALSO OBSERVED - 14 - 14 THAT THE DEFECTS POINTED OUT BY THE ASSESSING OFFIC ER IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS PER THE REMAND REPORTS S UBMITTED BY HIM, HAVE BEEN MADE THE BASIS ONLY FOR REJECTING THE BOOKS OF ACCOUNT AND NO COGENT BASIS HAVE BEEN GIVEN FOR ESTIMATING THE TURNOVER A ND THE NET PROFIT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION IN T HE CASE OF CIT VS. GAUTAM LIME KHANIJ UDYOG (SUPRA), WE SEE NO JUSTIFI CATION FOR THE ADDITION MADE BY THE ASSESSING OFFICER NOR THE ADDI TION SUSTAINED BY THE LD. CIT(A). THE APPEAL OF THE DEPARTMENT IS, THEREF ORE, REJECTED. THE GROUNDS NO. 2 & 3 OF THE ASSESSEES CROSS OBJECTIO N ARE ALLOWED. THE GROUND NO.1 OF THE CROSS OBJECTION OF THE ASSESSEE IS, HOWEVER, REJECTED, BECAUSE THE AO HAD POINTED OUT THE DEFECTS, WHICH J USTIFIED REJECTION OF BOOKS OF ACCOUNT. THE CROSS OBJECTION OF THE ASSESS EE IS, THEREFORE, PARTLY ALLOWED. 10. AS A RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2010. SD/- SD/- (JOGINDER SINGH) (B. R. KAUSHIK) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JULY, 2010. CPU* 26287