The ACIT, Circle-5, Surat V. M/s. Flatex Polyster, Surat

ITA 1939/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2398 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Assessee Lawyers: M J SHAH
• Keywords: Gross profit estimation; Additional evidence
• Section: 133(6); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUL SHRAWAT,JM & SHRI A N PAHUJA,AM ITA NO.1939/AHD/2010 (ASSESSMENT YEAR:-2006-07) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-5, ROOM NO. 309, 3 RD FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S M/S FLATEX POLYESTER, RIVER PALACE, 6 TH FLOOR, OPP. OLD CIVIL COURT, NANPURA, SURAT PAN: AAAFF 4374 Q [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI S S SHUKLA, DR ASSESSEE BY:- SHRI M J SHAH, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATE D 24-02-2010 OF THE LD. CIT(APPEALS)-IV, SURAT, RAISE S THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDI TION OF RS.6,38,836/- MADE BY THE AO ON ACCOUNT OF LOW GP. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV OUGHT TO HAVE UPHELD THE ORDER OF THE AO. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A)-IV, SURAT MAY BE SET-ASIDE AND THAT OF THE AO RESTORED. 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING INCOME OF RS.54,500/- FILED ON 31-12-2006 BY THE ASSESSEE, ENGAGED IN THE BUSINESS OF TRADING IN YAR N SUPPLIED BY RELIANCE INDUSTRIES LTD., AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS TH E ACT] , WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF A NOTICE UN DER SECTION 143(2) OF THE ACT ON 11-07-2007. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER[ AO IN SHORT] N OTICED THAT THE ASSESSEE REFLECTED NET PROFIT OF RS.12.16 LAKHS ON SALE OF RS.6.50 ITA N O.1939/AHD/2010 2 CRORE .ON VERIFICATION OF DETAILS OF TRADING IN SUR AT AND AHMEDABAD DIVISIONS, THE AO NOTICED A HUGE DIFFERENCE IN GP, EVEN THOUGH NATURE OF BUSINESS WAS SAME. TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT THEY MAINTAINED ONLY ONE TRADING A/C FOR THEIR ALL BUSINESS ACTIVITIES WHILE PURCHASE AND SALES A/C F OR SURAT & AHMEDABAD WERE KEPT SEPARATELY FOR THE PURPOSE OF SUPPLIERS AND COLLECTION FROM THEIR CUSTOMERS. EVEN COMMON RETURN UNDER SALES TAX ACT AND FOR SERVICE TAX WERE FILED AND EXPENSES WERE ALSO COMMON. IT WAS POINTED OUT THAT THE RATES OF OCTROI BEING DIFFERENT FOR DIFFERENT CITIES , IT WOULD BE ERRONEOUS TO ADO PT OCTROI EXPENSES IN THE RATIO OF SALES FOR BOTH THE PLACES. SINCE TH EY WERE SUPPLYING VARIOUS VARIETIES OF YARN MANUFACTURED BY RELIANCE INDUSTRIES LTD. FROM THEIR DEPOT AT SURAT AND SILVASA, APPARENTL Y TRANSPORT EXPENSES AND DISCOUNT ALLOWED VARIED. IN THESE CIRC UMSTANCES, THE ASSESSEE POINTED OUT THAT GP RATES IN AHMEDABAD DI VISION COULD NOT BE COMPARED WITH GP IN SURAT AND THEREFORE, THE RE WAS NO GROUND FOR INVOKING THE PROVISIONS OF SEC. 145 OF T HE ACT. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSES SEE AND WHILE POINTING OUT THAT THE INFORMATION CALLED FOR U/S 13 3(6) OF THE ACT WAS NOT RECEIVED FROM A NUMBER OF PARTIES AND IN TWO CASES BALANCE AS ON 31.3.2006 DIFFERED, REJECTED THE BOOK RESULTS O F AHMEDABAD DIVISION ,INVOKING THE PROVISIONS OF SEC. 145(3) OF THE ACT. ACCORDINGLY, APPLYING GP RATE OF 2.44% OF SURAT DI VISION, AS WORKED OUT IN THE ASSESSMENT ORDER AFTER ALLOCATING COMMON EXPENSES IN THE RATIO OF TURNOVER, TO THE DECLARED SALES IN AHMEDAB AD DIVISION, ADDED AN AMOUNT OF RS. 6,38,836/- . INTER ALIA, THE AO RELIED UPON DECISIONS IN CIT V. MCMILLAN & CO. [1958] 33 ITR 1 82 (SC),CIT V. BRITISH PAINTS INDIA LTD. [1991] 188 ITR 44 (SC), SETH NATH URAM MUNALAL V. CIT [1954] 25 ITR 216 (NAG.) AND KACHWALA GEMS VS. JCIT [2007] 288 ITR 10 (SC) 3. ON APPEAL, THE LD. CIT(A) AFTER HAVING A REMAND REPORT OF THE AO AND REPLY OF THE ASSESSEE THEREON, CONCLUDED AS UNDER: ITA N O.1939/AHD/2010 3 I HAVE CAREFULLY GONE THROUGH THE OBSERVATIONS OF T HE AO IN RESPECT OF BOTH THE GROUNDS AND ALSO THE DETAILED SUBMISSIONS MADE BY THE AR OF THE APPELLANT IN REGARD TO THE SAME. IN FACT THE CASE OF THE APPELLANT IS FAVOURABLY COV ERED BY THE JUDGMENTS OF THE HON'BLE JURISDICTIONAL AHMEDABAD BENCH OF THE I TAT IN THE CASES OF PUSHPANJALI DYEING & PRINTING MILLS PRIVATE LIMITED AND KIRAN CORPORATION CITED SUPRA BY THE APPELLANT. AS HELD BY THE HON'BL E ITAT IN SAID CASE, MERE FACT OF LOW G. P. IN ONE UNIT AT AHMEDABAD BY ITSELF CANNOT BE A GROUND FOR REJECTION OF BOOK RESULTS IN THE APPELLA NT'S CASE. FROM THE CONTENTS OF THE ASSESSMENT ORDER I FIND THAT BESIDE S THE FACT OF DIFFERENCES IN G.P. RATIOS THAT TOO AS PER THE WORKING MADE BY THE A.O. IN TWO SO-CALLED DIVISIONS OF THE APPELLANT, THE AO HAS NOT POINTED OUT ANY MISTAKES, SHORTS-COMINGS OR DISCREPANCIES MUCH LESS ANY SERIO US MISTAKES, SHORT- COMINGS OR DISCREPANCIES IN THE APPELLANT'S BOOKS O F ACCOUNT AND THE RELATED RECORDS PRODUCED BEFORE THE AO BESIDES I AL SO FIND THAT THE APPELLANT PRODUCED BEFORE THE AO QUANTITY RECORDS A LSO FOR THE WHOLE YEAR WHEREIN AGAIN NO MISTAKES ARE NOTICED BY THE AO. I AGREE WITH THE APPELLANT THAT WHEN THE FACT THAT SOME OF THE PARTI ES DID NOT RESPOND TO THE NOTICES OF THE AO ISSUED U/SEC. 133(6) OF THE ACT H AS NOT BEEN CONFRONTED WITH THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SUCH FACT CANNOT BE THE BASIS FOR REJECTION OF BOOKS OF ACCOU NTS AND THE BOOK RESULTS. BESIDES, AS STATED BY THE APPELLANT, WHICH HAS NOT BEEN DISPUTED BY THE AO DURING THE REMAND PROCEEDINGS, THE ISSUE OF DIFF ERENCES IN THE BALANCES OF TWO PARTIES DETAILED ABOVE AS PER THE B OOKS OF ACCOUNTS OF THE APPELLANT AND AS PER THE BOOKS OF ACCOUNTS OF SAID TWO PARTIES WAS ALSO NOT RAISED BY THE AO DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. I THEREFORE FIND THAT THERE IS A JUSTIFIED CASE FOR ADMISSION OF ADDITIONAL EVIDENCES FILED BY THE APPELLANT IN THE FORM OF CONFIRMATIONS FROM THE CONCERNED TWO PARTIES. WHEN THE AO HAS NOT RAISED T HE ABOVE ISSUE AT ALL DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AP PELLANT IS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE CONFIRMATION S OF THE SAID TWO PARTIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WHEN THE CONFIRMATIONS OF THE SAID TWO PARTIES TOGE THER WITH THE PAYMENT DETAILS FOR THE PAYMENTS MADE BY THE SAID TWO PARTI ES TO THE APPELLANT AGAINST THEIR DEBIT BALANCES IN THE APPELLANT'S BOO KS OF ACCOUNTS AS ON 31- 03-2006 ARE CONSIDERED, I FIND THAT THERE IS NO DIF FERENCES BETWEEN THE BALANCES OF THE SAID TWO PARTIES AS PER THE BOOKS O F ACCOUNTS OF THE APPELLANT AND THE APPELLANT'S BALANCES AS PER THE B OOKS OF ACCOUNTS OF THE SAID TWO PARTIES. AS STATED BY THE APPELLANT, IT IS NOT THE FINDING OF THE AO THROUGH THE REMAND PROCEEDINGS THAT THE CONFIRMATIO NS FILED BY THE APPELLANT ARE NOT CORRECT OR RELIABLE EVIDENCES. IT, THEREFORE, CLEARLY EMERGES THAT THE AO HAS REJE CTED THE BOOKS OF ACCOUNTS IN THE APPELLANT'S CASE ONLY ON THE BASIS OF LOW G. P. RATIO THAT ITA N O.1939/AHD/2010 4 TOO WORKED OUT BY HIM BY PREPARING TWO SEPARATE TRA DING ACCOUNTS FOR THE APPELLANT'S SO-CALLED SURAT AND AHMEDABAD DIVISIONS . RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HON'BLE JURISDICTIONAL AHMEDABAD BENCH OF ITAT IN THE ABOVE CITED CASES, I QUASH THE ACTION OF THE ID. AO OF REJECTING THE BOOKS OF ACCOUNTS ANDS- THE BOOK RESULTS AS UNJUSTIFIED AND UNCALLED FOR. THE FIRST GROUND OF APPEAL OF THE APPELLANT IS THUS ALLOWED. WHEN THE ACTION OF THE A.O. OF REJECTING THE BOOKS OF ACCOUNTS AND THE BOOK RESULTS IN THE APPELLANT'S CASE IS QUASHED, TH E RESULTANT ADDITION MADE BY THE AO OF RS.6,38,836/- STANDS DELETED AS C ONSEQUENCE OF QUASHING THE AO'S ACTION OF REJECTING THE BOOKS OF ACCOUNTS AND THE BOOK RESULTS IN THE APPELLANT'S CASE. HOWEVER, EVEN ON MERITS ALSO I FIND NO JUSTIFICATIO N IN UPHOLDING THE ADDITION OF RS.6,38,836/- MADE BY THE AO ON THE GRO UND OF ESTIMATION OF G. P. RATIO IN THE SO-CALLED AHMEDABAD DIVISION OF THE APPELLANT. THE DEPARTMENT HAS IN THE PAST ACCEPTED THE G. P. R ATIO IN THE APPELLANT'S CASE OF 2.16 % TO BE PROPER AS CAN BE SEEN FROM THE COPY OF THE ASSESSMENT ORDER IN THE APPELLANT'S CASE FOR THE AS SESSMENT YEAR 2005- 06. AS SUBMITTED BY THE APPELLANT DURING THE CURREN T YEAR THE APPELLANT HAS EVEN SHOWN BETTER G.P. OF 2.77% AND, THEREFORE, THE AO IS NOT JUSTIFIED IN INCREASING THE OVERALL G. P. RATIO AGAIN BY MAKING ESTIMATION OF G.P. RATIO IN ONE SO-CALLED DIVISION AT AHMEDABAD. FROM THE CO NTENTS OF THE ASSESSMENT ORDER ALSO IT CLEARLY EMERGES THAT IT IS NOT THE FINDING OF THE AO THAT THE OVERALL G. P. RATIO OF 2.77 % SHOWN BY THE APPELLANT DURING THE CURRENT YEAR IS A LOW OR AN UNACCEPTABLE G. P. RATI O. THUS, WHEN THE OVERALL G. P. RATIO IS FOUND TO BE P ROPER AND ACCEPTABLE, THERE IS NO JUSTIFICATION FOR ESTIMATING THE G. P. RATIO OF SALES OUTLET AT AHMEDABAD WHOSE GROSS PROFIT RATIO IS ALSO REPRESEN TED BY THE OVERALL G. P. RATIO OF 2.77 %. BESIDES, THERE IS NOTHING ON RE CORD WHICH SHOWS THAT THE APPELLANT IN FACT, DURING THE YEAR HAD TWO DIVI SIONS; ONE AT SURAT AND ANOTHER AT AHMEDABAD. AS STATED BY THE APPELLANT TH E APPELLANT ONLY HAD A SALES OUTLET AT AHMEDABAD WHICH BY NO STANDARD CA N BE SAID TO BE A DIVISION IN ITSELF. THE APPELLANT HAS PREPARED ONE SET OF BOOKS OF ACCOUNTS FOR ITS TOTAL BUSINESS WHICH WERE AUDITED AND FOUND CORRECT BY THE AUDITORS. BESIDES, NO TRADING ACCOUNT CAN BE PREPARED WITHOUT INSERTING THEREIN THE FIGURES OF OPENING AND CLOSING STOCK OF GOODS. THE PERUSAL OF THE TWO SEPARATE TRADING ACCOUNTS PREPARED BY THE AO AND RE PRODUCED ON PAGES NO. 8 & 9 OF THE ASSESSMENT ORDER SHOWS THAT IN NEI THER OF THE TRADING ACCOUNTS THE FIGURES OF OPENING OR CLOSING STOCK AP PEAR. IT IS BEYOND COMPREHENSION AS TO HOW THE AO COULD COMPLETE THE T RADING ACCOUNTS OF SO-CALLED TWO DIVISIONS OF THE APPELLANT WITHOUT PL ACING THEREIN THE FIGURES OF OPENING AND CLOSING STOCK OF YARN AT THE TWO SO- CALLED DIVISIONS. I ALSO AGREE WITH THE APPELLANT'S CONTENTION THAT THE BIFU RCATION OF ALL EXPENDITURES ITA N O.1939/AHD/2010 5 ON THE BASIS OF SALES BETWEEN THE TWO SO-CALLED DIV ISIONS IS NOT A SOUND BASIS FOR BIFURCATION SINCE SUCH BASE WOULD NOT TAK E CARE OF THE DIFFERENCES IN QUANTUM OF ACTUAL EXPENDITURES REQUIRED TO BE IN CURRED AT TWO PLACES. BESIDES, IT IS A FACT WITHIN PUBLIC DOMAIN THAT THE PURCHASE AND SALES RATES OF YARN OF RELIANCE INDUSTRIES LIMITED ARE FIXED AN D PUBLISHED BY THE SAID COMPANY ON DAILY BASIS AND THE INDIVIDUAL DEALER LI KE THE APPELLANT CANNOT CHANGE THEM TO SUPPRESS THE G.P. IN ONE OF ITS TRAD ING UNITS. IN VIEW OF ABOVE FINDINGS AND THE OBSERVATIONS, I F IND THAT THE ADDITION OF RS.6,38,836/- ON THE BASIS OF ESTIMATION OF G.P. RA TIO IN ONE OF THE TWO SO- CALLED DIVISIONS OF THE APPELLANT IS NOT JUSTIFIED AND DESERVES TO BE DELETED. 4 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST TH E AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR SUPPORTE D THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE S UPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID FACTS , UNDISPUTEDLY AND AS POINTED OUT BY THE LD. CIT(A), NO OTHER DEFECTS IN THE B OOKS OF ACCOUNTS EXCEPT PERHAPS THAT THE INFORMATION CALLED FOR U/S 133(6) OF THE ACT BY THE AO WAS NOT RECEIVED FROM A NUMBER OF PARTIES AND IN TWO CASES BALANCE AS ON 31.3.2006 DIFFERED, WERE POINTED OUT BY THE AO BEFORE REJECTING THE BOO K RESULTS . ON APPEAL, THE ASSESSEE SUBMITTED CONFIR MATION FROM THE TWO PARTIES, RECONCILING THE DIFFERENCE. THE LD. CI T(A) AFTER HAVING A REMAND REPORT FROM THE AO FOUND THAT THERE WAS NOTHING ON RECORD, SUGGESTING TWO DIVISIONS; ONE AT SURAT AND ANOTHER AT AHMEDABA D AS MENTIONED BY THE AO AND THAT THE ASSESSEE HAD ONLY A SALES OUTLET AT AHMEDABAD AND MAINTAINED ONE SET OF AUDITED BOOKS OF ACCOUNTS FOR ITS BUSINE SS . INTER ALIA, SINCE THE PURCHASE AND SALES RATES OF YARN SUPPLIED BY RELIAN CE INDUSTRIES LIMITED WERE FIXED AND PUBLISHED ON DAILY BASIS, THE LD. CIT(A) ACCEPTED THE BOOK RESULTS AND DELETED THE ADDITION. WE ARE OF THE OPINION THAT IT IS DIFFICULT TO CATALOGUE VARIOUS TYPES OF DEFECTS IN THE ACCOUNT BOOKS OF AN ASSESSE E WHICH MAY RENDER REJECTION OF ACCOUNTS ON THE GROUND THAT ACCOUNTS ARE NOT COM PLETE FROM WHICH THE CORRECT PROFIT CANNOT BE DEDUCED. MERELY BECAUSE CERTAIN BALANCES DIFFERED VIS--VIS ACCOUNTS OF THE TWO PARTIES OR THAT INFORMATION U/S 133(6) HAD NOT BEEN RECEIVED ITA N O.1939/AHD/2010 6 FROM FEW PARTIES, BOOK RESULTS CAN NOT BE DISCARDED ALTOGETHER. INDISPUTABLY, RECORDS WERE BEING MAINTAINED IN THE SAME MANNER A S IN THE PRECEDING YEARS, WHEN BOOK RESULTS HAVE BEEN ACCEPTED BY THE AO. THE LD. DR APPEARING BEFORE US DID NOT REFER US TO ANY MATERIAL CONTROVERTING THE AFORESAID FINDINGS OF FA CTS RECORDED BY THE LD. CIT(A). IN THE ABSENCE OF ANY DEFECTS WHATSOEVER, WE ARE OF THE OPINION THAT THERE WAS NO GROUND FOR REJECTING THE BOOK RESULTS AND MAKING ANY TRADING ADDITION. THOUGH THE AO COMPARED GP RA TES FOR SALES AT SURAT AND AHMEDABAD SEPARATELY, THE LD. CIT(A) CONCLUDED THAT IN THE ABSENCE OF FIGURES OF OPENING AND CLOSING STOCK, TRADING RESULTS COULD N OT BE COMPARED. HONBLE GAUHATI HIGH COURT IN ALUMINIUM INDUSTRIES (P) LTD . V. CIT (I.T.R. NO. 12 OF 1990) OBSERVED THAT A LOWER RATE OF GROSS PROFIT DE CLARED BY THE ASSESSEE AS COMPARED TO THE PREVIOUS YEAR, WOULD NOT IN ITSELF BE SUFFICIENT TO JUSTIFY ANY ADDITION. THE MERE FACT THAT THE PERCENTAGE OF LOSS OR GROSS PROFIT IS HIGH OR LOW IN A PARTICULAR YEAR DOES NOT NECESSARILY LEAD TO INFE RENCE THAT THERE HAS BEEN SUPPRESSION. LOW PROFIT IS NEITHER A CIRCUMSTANCE N OR MATERIAL TO JUSTIFY ADDITION OF PROFITS. THE RATIO OF THE JUDGMENTS IN DHAKESWARI COTTON MILLS LTD. V. CIT [1954] 26 ITR 775 (SC); RAGHUBIR MANDAL HARIHAR MANDAL V. STATE OF B IHAR [1957] 8 STC 770 (SC); STATE OF KERALA V. C. VELUKUTTY [1966] 60 ITR 239 (SC); STATE OF ORISSA V. MAHARAJA SHRI B.P. SINGH DEO [1970] 76 ITR 690 (SC); BRIJ BHUSAN LAL PARDUMAN KUMAR V. CIT [1978] 115 ITR 524 (SC); CHOUTHMAL AGARWALLA V. CIT [1962] 46 ITR 262 (ASSAM); R.V.S. AND SONS DAIRY FARM V. CIT [2002] 257 ITR 764 (MAD); INTERNATIONAL FOREST CO. V. CIT [1975] 101 ITR 721 (J & K) ; M. DURAI RAJ V. CIT [1972] 83 ITR 484 (KER); RAMCHANDRA RAMNIVAS V. STATE OF ORISSA [1970] 25 STC 501 (ORISSA); ACTION ELECTRICALS V. D EPUTY CIT [2002] 258 ITR 188 (DELHI) AND KAMAL KUMAR SAHARIA V. CIT [1995] 216 ITR 217 (GAUHATI) INDICATE THAT THE AO IS NOT FETTERED BY ANY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, AND HE IS ENTITLED TO ACT ON MATERIAL WHICH ARE NOT ACC EPTABLE IN EVIDENCE IN A COURT OF LAW, BUT WHILE MAKING THE ASSESSMENT UNDER THE PRIN CIPLES OF BEST JUDGMENT, THE INCOME-TAX OFFICER IS NOT ENTITLED TO MAKE A PURE G UESS WITHOUT REFERENCE TO ANY EVIDENCE OR MATERIAL. THERE MUST BE SOMETHING MORE THAN A MERE SUSPICION TO SUPPORT THE ASSESSMENT. LOW PROFIT IN A PARTICULAR YEAR IN ITSELF CANNOT BE A GROUND FOR INVOKING THE POWERS OF BEST JUDGMENT ASS ESSMENT WITHOUT SUPPORT OF ANY MATERIAL ON RECORD. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. ITA N O.1939/AHD/2010 7 AMITBHAI GUNWANTBHAI, 129 ITR 573 HELD THAT IF THER E WAS NO CHALLENGE TO THE TRANSACTIONS REPRESENTED IN THE BOOKS THEN IT IS NO T OPEN TO REVENUE TO CONTEND THAT WHAT IS SHOWN BY THE ENTRIES IS NOT THE REAL S TATE OF AFFAIRS. SECONDLY, EVEN IF FOR SOME REASON, THE BOOKS ARE REJECTED IT IS NOT O PEN TO THE AO TO MAKE ANY ADDITION ON ESTIMATE BASIS OR ON PURE GUESS WORK. N O SPECIFIC DISCREPANCIES OR DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE HAV E BEEN POINTED OUT BEFORE US NOR WAS ANY MATERIAL BROUGHT TO OUR NOTICE TO ESTA BLISH THAT PURCHASES WERE INFLATED OR RECEIPTS SUPPRESSED. IN THESE CIRCUMST ANCES , WE ARE OPINION THAT THAT THERE WAS NO JUSTIFICATION IN INVOKING THE PRO VISIONS OF SECTION 145 OF THE ACT [ VIKRAM PLASTICS,239 ITR 161(GUJ)]. THE BURDEN OF S HOWING THAT THE APPARENT STATE OF AFFAIRS IS NOT THE REAL ONE IS VERY HEAVY ON THE DEPARTMENT [BEDI & CO. PVT. LTD. VS. CIT,144 ITR 352(KARN) AFFIRMED BY HON BLE SUPREME COURT IN 230 ITR 580 WHILE NO OTHER MATERIAL HAS BEEN PLACED BEF ORE US TO DOUBT THE NATURE OF THE TRANSACTIONS RECORDED IN THE BOOKS. IF THERE WAS NO CHALLENGE TO THE TRANSACTIONS REPRESENTED IN THE BOOKS, THEN IT IS N OT OPEN TO REVENUE TO CONTEND THAT WHAT IS SHOWN BY THE ENTRIES IS NOT THE REAL S TATE OF AFFAIRS. IN THE LIGHT OF THESE OBSERVATIONS OF THE HONBLE JURISDICTIONAL HI GH COURT, WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A). THERE FORE, GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6. GROUND NOS. 2 & 3 BEING MERE PRAYER, DO NOT RE QUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED . 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 7-01-2011 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 7 -01-2011 COPY OF THE ORDER FORWARDED TO: ITA N O.1939/AHD/2010 8 1. M/S FLATEX POLYESTER, RIVER PALACE, 6 TH FLOOR, OPP. OLD CIVIL COURT, NANPURA, SURAT 2. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-5, ROOM NO. 309, 3 RD FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT 3. CIT CONCERNED 4. CIT(A)-IV, SURAT 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD