The DCIT, Circle-4, Baroda V. M/s. Refoil Earth Pvt.Ltd., Baroda

ITA 1281/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85792 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) I.T. A. NO. 1281/AHD/2011 (ASSESSME NT YEAR: 2007-08) TE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4, BARODA V/S REFOIL EARTH PVT. LTD. 23, AMARDEEP APARTMENT PASHA BHAI PARK GOTRI ROAD BARODA (APPELLANT) (RESPONDENT) PAN: AAACR9881K APPELLANT BY : SHRI B.L. YADAV, SR. D.R. RESPONDENT BY : SHRI SUNIL TALATI, A.R. ( )/ ORDER DATE OF HEARING : 16-03-2015 DATE OF PRONOUNCEMENT : 20 -03-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-III, BARODA DATED 04.11.2010 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE M ANUFACTURING OF FULERS EARTH (ACID WASHED NATURAL CLAY) AND OXYCLO (FLOCCU LATING, COAGULATING CHEMICAL). ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 22.10.2007 DECLARING TOTAL INCOME OF RS. 34,05,083/ -. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) ITA NO 1281 /AHD/2011 . A.Y. 2007-08 2 VIDE ORDER DATED 30.12.2009 AND THE TOTAL INCOME WA S DETERMINED AT RS. 1,00,39,999/-. AGGRIEVED BY THE ORDER OF A.O., ASS ESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 4.11.2010 GR ANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUNDS;- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 64,92,015/- B Y THE A.O. ON ACCOUNT OF GROSS PROFIT WITHOUT APPRECIATING THE FACT THERE IS A FAL L IN GROSS PROFIT AS COMPARED TO LAST YEAR FROM 34.20 % TO 23.72 %, WHICH HAS NOT BEEN SA TISFACTORILY EXPLAINED. THIS IS CO-RELATED TO THE FACT THAT IN THE CURRENT YEAR, TH E ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IB, WHEREAS IN THE EARLIER YEAR IT HAD CLAIMED SUCH DEDUCTION, THEREBY REDUCING ITS TAXABLE INCOME. THE DIRECT EXP ENSES (MANUFACTURING EXPENSES) INCREASED DRASTICALLY TO RS. 1,35,96,125/- FROM RS. 95,56,747/- IN THE IMMEDIATELY PRECEDING YEAR, DESPITE THE FACT THAT THERE WAS RED UCTION IN TURNOVER FROM RS. 6,26,06,647 IN THE EARLIER YEAR TO RS. 6,15,42,194/ - IN THE CURRENT YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN REVERSING THE ASSESSING OFFICER'S ACTION T O REJECT BOOK RESULTS U/S 145(3) OF THE INCOME TAX ACT, 1961, IGNORING THE FACT THAT THE AS SESSEE HAD INFLATED THE EXPENSES THROUGH BOGUS BILLS. 4. BEFORE US, LD. D.R. SUBMITTED THAT THE ONLY EFFECTI VE GROUND IS DELETION OF ADDITION ON ACCOUNT OF GROSS PROFIT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE GROSS PROFIT RATIO OF 3 YEARS SUBMITTED BY THE ASSESSEE, A.O NOTICED THAT FOR THE YEAR UNDER CONSIDERATION THERE WAS A SHARP FALL IN THE GROSS PROFIT AS COMPARED TO EARLIER YEARS. THE ASSESSEE WAS THEREFO RE ASKED TO JUSTIFY THE FALL IN GROSS PROFIT TO WHICH ASSESSEE INTERALIA SU BMITTED THAT THE MANUFACTURING PROCESS OF FINISHED PRODUCTS HAS CHAN GED DURING THE YEAR AND DUE TO THE CHANGE IN MANUFACTURING PROCESS THERE WA S INCREASE IN LABOUR REQUIREMENT. ON FURTHER PERUSING THE DETAILS FURNIS HED BY THE ASSESSEE, A.O NOTICED THAT IN 20 BILLS OF LABOUR CHARGES PAID TO BARODA EARTH PVT. LTD. AN ASSOCIATES CONCERN OF THE ASSESSEE, HE NOTED THAT B ARODA EARTH PVT. LTD. HAD ITA NO 1281 /AHD/2011 . A.Y. 2007-08 3 NOT CHARGED ANY VAT OR SERVICE TAX TO THE ASSESSEE. HE ALSO NOTED THAT IN THE BILLS, THE TRUCK NUMBER WERE ALSO NOT MENTIONED THE BILLS WERE UNSIGNED AND EVEN THE COPY OF THE BILL WHICH WERE MEANT FOR TRANSPORTER AND BARODA EARTH WERE WITH THE ASSESSEE. HE THEREFORE CONSIDE RED THAT IN THE ABSENCE OF PROPER JUSTIFICATION FOR FALL IN GROSS PROFIT AND T HE DISCREPANCIES FOUND IN THE BILLS OF BAORDA EARTH PVT. LTD, THE BOOK RESULTS SH OWN BY THE ASSESSEE DID NOT SHOW CORRECT PROFIT AND THEREFORE CANNOT BE REL IED. HE THEREFORE INVOKING THE PROVISIONS OF SECTION 145(3), REJECTED THE BOOK S OF ACCOUNTS AND THEREAFTER CONSIDERED THE GROSS PROFIT TO BE AT THE SAME RATE AS THAT OF IMMEDIATE PRECEDING YEAR AND THUS WORKED OUT GROSS PROFIT AT RS. 64,92,015/- AND ADDED TO THE INCOME. AGGRIEVED BY T HE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MA DE BY THE A.O BY HOLDING AS UNDER:- 5.3.3.A PROVISION OF SECTION 145(3) OF THE ACT CAN BE INVOKED FOR REJECTION OF BOOKS IF THE AO GIVES A FINDING THAT (I) ASSESSEE IS NOT FOLLOWI NG REGULARLY ANY ACCOUNTING STANDARD NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WI TH SECTION 145(2) OF THE ACT OR (II) THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR CO MPLETENESS OF ACCOUNTS OR (III) WHERE ASSESSEE IS NOT FOLLOWING ANY METHOD OF ACCOUNT REG ULARLY. AS HAS BEEN OBSERVED FROM THE ASSESSMENT ORDER AND THE SUBMISSION, THERE IS NO CASE AS REGARD TO THE FACT THAT THE ASSESSEE IS NOT FOLLOWING REGULARLY THE ACCOUNTING STANDARD OR VIOLATED SUCH STANDARD, NEITHER IT HAS BEEN FOUND THAT METHOD OF ACCOUNTING FOLLOWED IS IRREGULAR NOR IT IS A CASE WHICH CAN CO ME SATISFACTORILY WITHIN THE AMBIT OF CORRECTNESS OR COMPLETENESS OF ACCOUNTS. THAT BEING NOT THE CASE, THE INCOME CHARGEABLE UND ER THE HEAD ' PROFITS AND GAINS OF THE BUSINESS' HAS TO BE COMPUTED IN ACCORDANCE W ITH THE METHOD OF ACCOUNTING REGULARLY FOLLOWED AND RESULT DISCLOSED AS PER THE BOOKS OF ACCOUNT BY THE ASSESSEE. FOR REJECTING THE BOOKS, THE AO HAS TO SHOW WHAT W AS THE ACCOUNTING STANDARD REQUIRED TO BE FOLLOWED COMPULSORY OR WHAT WAS FOLL OWED IN EARLIER YEAR AND HAS NOT BEEN FOLLOWED THIS YEAR. IT HAS FURTHER TO SHOW THAT BY NOT DOING SO OR FOL LOWING THE ONE FOLLOWED EARLIER, THE COMPUTATION OF CORRECT INCOME CANNOT BE ARRIVED AT. MOREOVER, THE AO HAS TO DEMONSTRATIVELY COME TO THE CONCLUSION THAT THE ACCOUNTS ARE NOT CORRECT OR COMPLETE AS THERE EXISTS SERIOUS DEF ECTS IN THE MAINTENANCE OF THE ACCOUNT. THE AO HAS TO DEMONSTRATE THAT THE WAY ACCOUNTS ARE WRITTEN OR KEPT, THE PROFIT CANNOT BE CORRECTLY DEDUCED THERE-FROM OR IT HAS TO SHOW TH AT THE ASSESSEE HAS ABRUPTLY CHANGED ITA NO 1281 /AHD/2011 . A.Y. 2007-08 4 THE METHOD OF ACCOUNTING SUCH AS FROM CASH TO MERCANTILE OR FOR DIFFERENT TRANSACTIONS ADOPTING DIFFERENT METHODS. EVERY FINDING RELATING TO EITHER OF THESE CONDITIO NS HAS TO BE BASED ON EVIDENCE AND SHOULD NOT BE MERELY AN OPINION OR SUSPICION OF THE AO. MOREOVER IT IS NOT ALWAYS CORRECT TO RESORT TO THE ACTION OF REJECTING THE BO OKS IF ADEQUATE MATERIAL IS NOT AVAILABLE TO SUPPORT THE ESTIMATION OF HIGHER INCOME AS COMPA RED TO WHAT THE ASSESSEE HAS SHOWN. THUS, REJECTION OF BOOKS UNDER SECTION 145 IS THE INITIAL STEP BEFORE THE AO RESORT TO THE NEXT STEP I.E. ESTIMATION OF INCOME. I DO NO T FIND AS MAY BE SEEN ABOVE ANY SATISFACTORY GROUNDS FOR SUCH AN ACTION NOR IT IS D ISCERNIBLE FROM THE ORDER AS TO THE WORKING OF HIS MIND FOR REJECTION OF BOOKS AND THER EFORE, IT HAS TO BE HELD THAT THE AO HAS FAILED TO DISCHARGE AND SATISFY THE REQUIREMENTS FO R REJECTION OF BOOKS OF ACCOUNT TO INVOKE SECTION 145(3) OF THE ACT. IT HAS BEEN HELD THAT THE ACCOUNTS CANNOT BE REJEC TED IF THEY ARE NOT INCORRECT OR IF NO INFIRMITY IN THE AUDIT REPORT IS NOTICED (MADNAN I CONSTRUCTION CORPORATION. PVT LTD. VS. CIT (2008) 296 ITR 45(GAU).THE AO HAD NOT RECOR DED ANY FINDING THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT WERE INCORRECT, RENDERING IT IMPOSSIBLE TO DEDUCE THE PROFIT AND DESPITE THAT REJECTED THE BOOKS OF A CCOUNT. THE ASSESSMENT ORDER DID NOT INDICATE ANY INCONSIS TENT OR INFIRMITY IN THE AUDIT REPORT. THE ACCOUNTS WERE OTHERWISE CORRECT AND COM PLETE. NEITHER THERE IS ANY CASE TO ARRIVE AT THE SATISFACTORY CONCLUSION OR FINDING TH AT THE BOOKS OF ACCOUNT ARE INCOMPLETE OR INCORRECT AND HENCE THEY CANNOT BE REJECTED ( CI T VS. RAJNIKANT DAVE (2006) 281 ITR 6(AII.) EVEN IN THE WHERE ABSENCE OF REGISTER OR ITEM WISE ACCOUNTING OF THE STOCK WAS NOTICED BUT IF THERE IS NO FINDING WHICH CAN SATISF ACTORILY BE REACHED THAT INCOME CANNOT BE DEDUCED FROM THE METHOD OF ACCOUNTS FOLLOWED, RE JECTION OF BOOKS UNDER SECTION 145 CANNOT BE RESORTED TO. (ASHOK REFRACTORY PVT VS.CIT (2005) 279 ITR 457(CAL.) IT IS ALSO HELD THAT IF THERE IS NO FINDING THAT T HE INCOME CANNOT BE DEDUCED FROM THE ACCOUNTS MAINTAINED BY THE ASSESSEE, THEN REJEC TION OF ACCOUNT WOULD BE INVALID.( JUGGILAL KAMLAPAT UDHYOG VS.CIT (2005) 278 ITR 52(C AL). AS ALREADY POINTED OUT MERELY BECAUSE THREE BILLS LACKS THE SIGNATURE WHICH IS DULY EXPLAINED AND OTHERWISE, THERE IS NO INFIRMITY WHICH HAS BEEN NOTICED WITH REFERENCE TO MAINTENANCE OF BOOKS OF ACCOUNT AND EVEN THOSE B ILLS ARE ROUTINELY RECORDED SUBJECTED TO OTHER TASTE OF ACCOUNTING AND TAXATION SUCH AS C HALLANS, EXCISE RECORDS, OCTROI RECEIPTS CONTAINING VEHICLE NUMBER AND TDS. IT IS AN INCORRECT OPINION LEAVE ASIDE SATISFACTOR Y FINDING, THAT THE BOOK RESULT SHOWN BY THE ASSESSEE IS NOT CORRECT AND THE OPINIO N OF THE AO WHICH FOLLOWED THERE-FROM THAT IT IS NOT POSSIBLE TO DEDUCE CORRECT PROFIT FR OM THE INFORMATION AND DETAILS PROVIDED IS WITHOUT ANY SOUND BASIS AND THEREFORE THE REJECT ION OF BOOK RESULT BY INVOKING THE PROVISION OF SEC. 145(3) OF THE ACT IS A DECISION G ROSSLY UNCALLED FOR. IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN CIT VS. PADAMCHAND RAMGOPAL (1970) 76 ITR 719(SC) THAT ' WHAT HAS BEEN NOTICED WERE TWO MISTAKES WHICH WERE INSIGNIFICANT MISTAKE AND THEREFORE AFFORDED N O BASIS FOR REJECTING THE ACCOUNTS ........ ' NO MISTAKES WERE FOUND IN THE ACCOUNTS WHEREAS THE TWO MISTAKES NOTICED WERE HELD TO BE INSIGNIFICANT AND THEY AFFORDED NO BASIS FOR REJECTING THE ACCOUNTS. THEREFORE, ON FACT THE ADDITION MADE WERE NOT IN ACCORDANCE WI TH THE LAW AND THEY WERE MADE ITA NO 1281 /AHD/2011 . A.Y. 2007-08 5 ARBITRARILY BY REJECTING ALL BOOKS OF ACCOUNT ON TH E ALLEGED DISCREPANCY WHICH WERE HELD TO BE INSIGNIFICANT. IT HAS BEEN CONCLUDED THAT NO DISCREPANCY COULD BE FOUND IN THE MAINTENANCE OF ACCOUNT . THE SERVICES BEING OFFERED BY THE SISTER CONCERN WERE FULLY DISCLOSED AND HENCE TO BE CONCLUDED AT ARMS LENGTH AS THE PAYMENT HAS N OT BEEN QUESTIONED. THUS, IT HAS TO BE HELD THAT NO DISCREPANCIES WERE POINTED OUT IN THE MAINTENANCE OF ACCOUNT AND THAT THE APPELLANT HAD GIVEN SUFFICIENT REASONS FOR THE MINO R OMISSIONS. WHEREAS THE FACT REMAIN THAT THE TRANSACTION OF TH E FACTORY IS SUBJECT TO EXCISE REGULATION OF THE DEPARTMENT OF EXCISE AND THERE IS NOTHING ON RECORD THAT GENUINENESS OF THE TRANSACTIONS HAS BEEN DOUBTED BY THE SAID DEPAR TMENT AND NEITHER THAT HAS BEEN DISPUTED BY THE AO, THAT BEING THE FACTUAL ASPECT, REJECTION OF BOOKS OF ACCOUNT ON ESTIMATION OF GROSS PROFIT HAD TO BE HELD AS UNCALL ED FOR ( CIT VS.LUDHIANA STEEL ROLLING MILLS LTD) (2008) 166 TAXMAN 20(P&H). MOREOVER, IT IS OBSERVED THAT THERE WERE NOT ANY D EFECT IN THE ACCOUNTS ON THE BASIS OF WHICH IT COULD BE SAID THAT THE ACCOUNTS W ERE INCORRECT OR INCOMPLETE OR WERE UNRELIABLE. THAT ACCOUNTS HAVE BEEN REJECTED BY THE AO ON THE SOLE GROUND THAT JUST THREE BILLS DID NOT BEAR THE SIGNATURE AND FORMED THE OPI NION THEREON TO TREAT THE WHOLE OF SUCH TRANSACTIONS AS BOGUS IN TOTAL DISREGARD OF THE COR ROBORATIVE EVIDENCE IN THE FORM OF EXCISE RECORD, EXCISE NUMBER, GST/CST NUMBER, ECC N UMBER, EXCISE CHALLAN, OCTROI RECEIPTS BEARING VEHICLE REGISTRATION NUMBER AND HE NCE IT IS TOTALLY INCORRECT TO COME TO THE CONCLUSION THAT THE ACCOUNTS SUFFERED FROM ANY INFIRMITIES LEAVE ASIDE SERIOUS INFIRMITY. SINCE THE REJECTION OF BOOKS OF ACCOUNT WAS DONE W ITHOUT RECORDING ANY FINDING ON CORRECTNESS OR COMPLETENESS OF THE ACCOUNT, THIS AM OUNTED TO AN INVALID ASSUMPTION OF JURISDICTION BY THE AO ( ACIT VS. NANA PATEKAR 209 SOT 8(MUM) : IT HAS BEEN HELD THAT EVEN WHERE THERE ARE NO SA LES BILLS BUT ACCOUNTS ARE RECORDED ON THE BASIS OF STATEMENTS, THE REJECTION OF BOOKS OF ACCOUNT IS UNCALLED FOR. THUS NON AVAILABILITY OF SALES BILL OR VOUCHER IS C ONSIDERED TO BE NOT A SIGNIFICANT DEFECT WHICH CAN LEAD TO INVOKING OF PROVISION U/S 145( 3) AND ESTIMATION OF GROSS PROFIT WHERE THE FACTS ARE THAT THE BOOKS OF ACCOUNT ARE AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT REGULARLY (ITO VS. LAXMINARAYAN RAMSWAROOP SHIVHAR E (2009) 119 ITD 15 (AGRA) (TM). IT MAY BE STATED THAT THE PROVISIONS OF SEC. 145 ARE DESCRIBED AS MACHINERY SECTION AND NOT AN ASSESSMENT SECTION. FURTHER AS A MACHINERY SECTION, IT DOES NOT QUALIFY TO BE A CHARGING SECTION OF THE ACT. IT IS A WELL S ETTLED LAW THAT WHERE METHOD OF ACCOUNTING IS REGULARLY EMPLOYED, THE INCOME IS TO BE COMPUTED IN ACCORDANCE THEREOF UNLESS TRUE PROFIT CANNOT BE DEDUCED THERE-FROM. HAVING SIGNATURE ON THE BILL MAY BE OF AN ADDED EV IDENCE OR HAVE MORE CREDIBILITY BUT LACK OF SIGNATURE ON A FEW OF THE B ILLS WHICH OTHERWISE ARE DULY SUPPORTED BY CHALLANS REFLECTING MOVEMENT OF MATERIAL SUCH AS DATE, WEIGHT, TIME ETC. OCTROI RECEIPTS HAVING VEHICLE NUMBER AND PART OF THE EXCISE RECORD S, IT CANNOT PER SE LEAD TO AN INFERENCE THAT THE ACCOUNTS ARE FALSE AND ENTAIL RE JECTION OF BOOK RESULTS THOUGH PRESENCE OR ABSENCE OF SIGNATURE ON THAT THREE BILLS NO DOUB T WILL ADD TO THE MORE CREDIBILITY AND ENFORCEABILITY IN CASE OF DEFAULT. NEEDLESS TO ADD THAT THE CORRESPONDING CHALLANS ARE DULY SIGNED AND SUCH BILLS ARE DULY ACCOUNTED FOR. ITA NO 1281 /AHD/2011 . A.Y. 2007-08 6 THIS IS ONLY A SUSPICION NOTHING MORE THAN THAT AN D SUSPICION CAN NOT GIVE RISE TO REJECTION OF BOOKS OF ACCOUNT. IT IS NOT THE CASE T HAT THE IMPUGNED BILLS ARE NOT VOUCHED, NOT VERIFIABLE OR NOT RECORDED IN THE BOOKS. NEITHER IT IS THE CASE THAT THEY HAVE BEEN FOUND T O BE OMITTED . THERE IS NO CASE AS OF PIN POINTING ANY OMISSION OR NON GENUINE ENTRIES WHICH COULD BE CONSIDERED SUFFICIENT ENOUGH LEADING TO THE REJECTION OF BOOK RESULT. IT MAY BE STATED THAT ALL THE ENTRIES MADE IN THE BOOKS ARE AUDITED AND ARE SUPPORTED BY VERIF IABLE BILLS AND THAT IS UNDISPUTED. THERE IS NO CASE OF INFLATED EXPENDITURE OR PURCHAS ES OR ANY INSTANCE OF SALE OUT OF BOOKS EXCEPT THE GENERAL REMARKS OF THE A.O THAT THERE IS A FALL IN THE GROSS PROFIT. MERELY BECAUSE OF ABSENCE OF SIGNATURE IN IMPUGNED THREE BILLS IT CANNOT BE JUSTIFIED THAT THE BOOKS OF ACCOUNT COULD BE REJECT ED AND THE GROSS PROFIT RATE SHOULD BE SUBSTITUTED. THE AO HAS NOT DISPUTED THE JOB WORK A S SUCH OR THE BILLS THEREOF FROM BARODA EARTH PVT LTD. HAD THAT BEEN THE CASE, IT CO ULD HAVE LEAD TO EXAMINATION OF THE SAID PARTY BY THE AO TO VERIFY THE GENUINENESS THER EOF AS ALREADY EXPLAINED THAT BARODA EARTH PVT LTD. IS AN ASSESSABLE ENTITY FILING REGUL ARLY RETURNS OF INCOME, THE BILLS RAISED HAD BEEN DULY ACCOUNTED FOR IN THE SAID COMPAN , RE TURNS OF INCOME ARE FILED, TDS MADE AND PAYMENTS ARE NOT BY ANY OTHER MODE THAN BY CHEQ UE . THAT BEING THE POSITION, THERE IS NO CASE TO DOUBT THE SUBMISSION OF THE APPELLANT AND TO COME TO CONTRARY CONCLUSION THAT THEY ARE BO GUS AND THAT THE BOOKS OF ACCOUNT ARE NOT COMPLETE . IN VIEW THEREOF, THERE IS NO CASE FO R REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE LT.ACT , 1961. AS MENTIONED ABOVE, IT HAS BEEN OBSERVED THAT THE BILLS AS WELL AS THE PARTIES ARE HELD TO BE GENUINE IN AS MUCH AS THAT THE PARTY IS AVAILABLE AT THE GIVEN ADDRESS HAVING PAN AS WELL AS GST & CST NUMBER INCLUDING CENTRAL E XCISE REGISTRATION NUMBER, PLA NUMBER & ECC NUMBER. THE PAYMENTS ARE THROUGH THE BANK BY CHEQUE, NO OT HER INFIRMITY HAVE BEEN NOTICED, THE CHANGE IN THE PROCESS HAS ULTIMATELY I NCREASED THE SALES OF THE APPELLANT IN THE LATER PART OF THE YEAR AND BY NEARLY 57% (IN NE XT FINANCIAL YEAR), THEREFORE THE DECISION OF THE A.O THAT ITS BOGUS AND THE BOOK RES ULT SHOWN BY THE ASSESSEE IS NOT CORRECT IS HELD TO BE NOT TENABLE AND REJECTED. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, A.O HAD RESORTED TO PROVISION OF SECTION 145(3) AND ITA NO 1281 /AHD/2011 . A.Y. 2007-08 7 REJECTED THE BOOKS OF ACCOUNT AND THEREAFTER DETERM INED THE GROSS PROFIT. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE AND BY A WELL REASONED AND DETAILED ORDER AND FOR THE REAS ONS STATED IN THE ORDER HAS DELETED THE ADDITION MADE BY A.O. BEFORE US, REVENU E HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD . CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. C IT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 03 - 2015. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD