SATISH CHAND AGARWAL, Jaipur V. ITO, TONK

ITA 311/JPR/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6199 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Rejection of books of accounts
• Section: 143(3); 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 311/JP/2015 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 SATISH CHAND AGARWAL, PROP.- M/S SUMIT MEDICAL HALL, SUBHASH NAGAR, TONK. CUKE VS. I.T.O., WARD- TONK. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABPPA 5989 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11/04/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/04/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES F ROM THE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 28/02/2014 FOR T HE A.Y. 2009-10. 2. IT IS NOTICED BY THE BENCH THAT THERE IS DELAY O F 331 DAYS IN FILING THE APPEAL, FOR WHICH THE ASSESSEE HAS FILED AN APP LICATION FOR CONDONATION OF DELAY. THE LD AR OF THE ASSESSEE HAS PRAYED TO CONDONE THE DELAY. THE LD DR HAS RAISED OBJECTION ON SUBMISS ION OF LD. AR TO CONDONE THE DELAY. AFTER HEARING ON CONDONATION OF DELAY, WE ARE OF THE VIEW THAT THE ASSESSEE WAS HAVING SUFFICIENT CAUS E FOR NOT FILING THE ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 2 APPEAL ON TIME, THEREFORE, IN THE INTEREST OF JUSTI CE AND EQUITY, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN WHOLE SALE AND RETAIL TRADING OF MEDICINES UNDER THE NAME AND STYLE M/S S UMIT MEDICAL HALL AT TONK. A SURVEY U/S 133A OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) WAS CARRIED OUT ON 10/07/2008 AT THE BUSINESS P REMISES OF THE ASSESSEE AND DURING THE SURVEY, STATEMENT WAS RECORD ED U/S 133A OF THE ACT WHEREIN THE ASSESSEE SURRENDERED AMOUNT OF RS. 60,09,418/-. THE ASSESSEE CLAIMS THAT THIS STATEMENT WAS OBTAINED FROM THE ASSESSEE BY THE SURVEY OFFICIALS ON VARIOUS ISSUES. THE ASSESSEE DID NOT DISCLOSE THE SURRENDERED AMOUNT IN THE RETURN OF IN COME. THE RETURN WAS FILED DECLARING TOTAL INCOME OF RS. 4,23,780/-. IN THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE INCOME WAS AS SESSED AT RS. 68,92,550/-. THE LD. CIT(A) HAS CONFIRMED THE ADDITIO N OF RS. 60,09,418/- ON THE BASIS OF STATEMENT RECORDED DURI NG THE SURVEY OPERATION AND GRANTED PART RELIEF TO THE ASSESSEE F ROM THE TRADING ADDITION MADE AFTER REJECTING BOOKS OF ACCOUNT BY I NVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 3 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS.8,04, 155/- MADE ON ACCOUNT OF EXCESS CASH FOUND DURING THE COURSE OF S URVEY ARBITRARILY WITHOUT APPRECIATING THE RECONCILIATION SUBMITTED, THUS THE ADDITION OF RS.8,04,155/- CONFIRMED BY LD. CIT(A) DESERVES T O BE DELETED. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE ASSESSEE HAD SUBMITTED VITAL EVIDENCES DURING THE C OURSE OF ASSESSMENT PROCEEDINGS WHEREIN CASH AS PER BOOKS OF ACCOUNTS AND THAT FOUND DURING THE COURSE OF SURVEY IS IN PARITY . HENCE THE ADDITION OF RS.8,04,155/- SO CONFIRMED DESERVES TO BE DELETED. 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE STATEMENTS RECORDED DURING THE COURSE OF SURVEY WHEREIN THE AS SESSEE HAS CATEGORICALLY STATED THAT THE BOOKS OF ACCOUNTS AS ON DATE OF SURVEY WERE NOT COMPLETE AND VARIOUS ENTRIES WERE TO BE MA DE TO ARRIVE AT THE FIGURE OF CASH IN HAND. HENCE THE ADDITION OF R S.8,04,155/- SO CONFIRMED DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN J UPHOLDING THE ADDITION OF RS.10, 00,000/- MADE ON ACCOUNT OF UNACCOUNTED ADVANCE ARBITRARILY WITHOUT CONSIDERING THE SUBMISSION MADE AND EVIDENCES ADDUCED. HENCE THE AD DITION OF RS.10,00,000/- SO CONFIRMED DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF LD. ASSES SING OFFICER IN MAKING AN ADDITION OF RS.13,62,000/- ON ACCOUNT OF UNACCOUNTED DEBTORS ARBITRARILY, THUS THE ADDITION SO CONFIRMED DESERVES TO BE DELETED. 3.1. THAT THE LD. C1T(A) HAS FURTHER ERRED IN IGNO RING THE CONTENTION OF THE APPELLANT THAT THE PAPER IS WRITTEN IN A SINGLE INK IN A DAY AND IS A DUMB DOCUMENT. HENCE THE ADDITION OF RS.13.62 LAC S SO CONFIRMED DESERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. C1T(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS.28,43 ,039/- MADE ON ACCOUNT OF ALLEGED EXCESS STOCK FOUND DURING THE CO URSE OF SURVEY ARBITRARILY. THUS, THE ADDITION SO SUSTAINED DESERV ES TO BE DELETED. ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 4 4.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLD ING THE ADDITION OF RS.28,43,039/- ON ACCOUNT OF ALLEGED EXCESS STOCK S OLELY BY BORROWING THE OBSERVATIONS OF LD. AO WHEREIN HE HAS RELIED UPON THE FORCED STATEMENT MADE BY THE ASSESSEE AND WITHO UT BRINGING ON RECORD ANY MATERIAL EVIDENCE IN SUPPORT OF HIS CONT ENTION. HENCE THE ADDITION OF RS.28,43,039/- SO SUSTAINED DESERVES TO BE DELETED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN IGNORING THE FACT THAT ALL THE ADD ITIONS (CHALLENGED UNDER GROUNDS OF APPEAL NOS. 01 TO 4.1) HAVE BEEN M ADE BY LD. AO SOLELY ON THE BASIS OF STATEMENTS OF ASSESSEE RECOR DED ON OATH DURING THE COURSE OF SURVEY U/S 133A CONDUCTED AT T HE BUSINESS PREMISES OF ASSESSEE AND WITHOUT REFERRING TO ANY O THER MATERIAL. THUS, ALL THESE ADDITIONS DESERVE TO BE DELETED IN AS MUCH AS THESE ADDITIONS HAVE BEEN MADE BY IGNORING THE WELL ESTAB LISHED LAW THAT NO STATEMENTS CAN BE RECORDED ON OATH DURING THE CO URSE OF SURVEY AND IF RECORDED, CANNOT BE RELIED UPON FOR THE PURP OSE OF MAKING ADDITIONS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF LD. AO OF INVOKING THE PROVISIONS OF SECTION 145(3) ARBITRARILY. 6.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIR MING THE ACTION OF LD. ASSESSING OFFICER IN VARYING THE TURNOVER DECLARED BY THE ASSESSEE FROM RS.1,70,05,305/- TO RS.1,80,00,000/- WITHOUT B RINGING ON RECORD ANY ADVERSE MATERIAL TO SUPPORT HIS CONTENTI ON. HENCE THE TURNOVER AS DECLARED BY THE ASSESSEE DESERVES TO BE ACCEPTED. 6.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIR MING THE ADDITION OF RS. 1,42,778/- BY APPLYING THE G.P. RATE AT 13.24% INST EAD OF 13.17% DECLARED BY THE ASSESSEE. HENCE ADDITION OF RS.1,42 ,778/- SO MADE DESERVES TO BE DELETED. 7. WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO. 1 TO 6.2 ABOVE AND IN THE ALTERNATIVE, THE BENEFIT OF TELESCOPING AND SET OFF OF THE ADDITION MADE INTO EACH OTHER OUGHT TO HAVE BEEN ALLOWED ON THE ADDITIONS/ DISALLOWANCES FINALLY UPHELD BY THE APPELLATE ORDER . ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 5 8. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF THIS APPEAL AT THE TI ME OR BEFORE THE ACTUAL HEARING OF THE CASE. 5. WHILE PLEADING ON BEHALF OF THE ASSESSEE REGARDI NG GROUNDS NO. 1 TO 5 OF THE APPEAL, THE LD AR HAS SUBMITTED THAT THE SURVEY TEAM RECORDED THE STATEMENT ON OATH WHICH IS NOT AS PER L AW AS NO STATEMENT CAN BE RECORDED ON OATH U/S 133A OF THE A CT ON OATH. FURTHER HE ALSO SUBMITTED THAT THIS STATEMENT WAS NO T VOLUNTARILY BUT OBTAINED BY THE SURVEY TEAM OFFICIALS. HE HAS SUBMI TTED THAT ONCE THE ASSESSEE HAS RECONCILED THE ISSUES ON WHICH THE SURV EY TEAM OBTAINED THE ADMISSION THEN NO ADDITION CAN BE MADE ONLY ON THE BASIS OF STATEMENT SO OBTAINED DURING SURVEY. THE A.O. HAS NO T TAKEN ANY PAIN TO FURTHER INVESTIGATE THE ISSUES AND PIN POINT ANY DISCREPANCY IN THE AUDITED BOOK ON THESE ISSUES. HE HAS SUBMITTED THAT THE CASH FOUND OF RS. 8,04,379/- WAS AS PER THE BOOKS AND THE ASSESSEE HAS SUBMITTED UPDATED CASH BOOKS BEFORE THE A.O. DURING THE ASSES SMENT PROCEEDINGS WHEREIN HE HAS NOT FOUND ANY FAULT. HE HAD NOT POINT ED OUT ANY DEFECT IN CASH BOOK. LD AR HAS ALSO SUBMITTED THAT THE EXC ESS STOCK WAS ALSO RECONCILED. THE SURVEY TEAM HAS VALUED THE EXCESS ST OCK BY TAKING MRP WHILE THE ASSESSEE PURCHASED GOODS AT MUCH LESSER PR ICE. HE ALSO SUBMITTED THAT THE OLD OUTDATED MEDICINES HAD ALSO BEEN TAKEN INTO ACCOUNT. HE SUBMITTED THAT THE ASSESSEE HAS SUBMITT ED A CHART PLACED ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 6 AT PAGE NO. 101 & 102 OF THE PAPER BOOK (ANNEX-A) A ND PAGE 103 (ANNEX-B) TO ESTABLISH THESE FACTS THAT THE SURVEY TEAM HAS VALUED THE STOCK ON MRP AND PURCHASE PRICE IS MUCH LESS TO THA T BUT A.O. HAS NOT CONSIDERED THE SAME. HE HAS DRAWN OUR ATTENTION TO PAGE NOS. 101 AND 102 OF THE PAPER BOOK WHEREIN AROUND 68 EXAMPLES HAV E BEEN MENTIONED OF DIFFERENCE IN MRP AND PURCHASE PRICE. THE A.O. HAS FAILED TO EVEN VERIFY SUCH CLAIM OF THE ASSESSEE. HE ALSO SUBMITTED THAT THE ADDITION OF RS. 10.00 LACS MADE FOR THE ADVANCES GI VEN TO SHRI PAWAN KUMAR IS ALSO NOT ESTABLISHED BY THE FACTS AS THERE WAS NO SIGNATURE OF SHRI PAWAN KUMAR ON THE PAPER. FURTHER THE A.O. RECO RDED STATEMENT OF SHRI PAWAN KUMAR BUT HE WAS NOT ASKED ANY QUESTION IN THIS REGARD. LD. A.R. FURTHER SUBMITTED THAT THE A.O. HAS NOT VE RIFIED EVEN A SINGLE SO CALLED DEBTORS AND SIMPLY MADE THE ADDITION OF R S. 13,62,000/-. THE ASSESSEE HAS NOT DISCLOSED THE AMOUNT IN RETURN OF INCOME AND RETRACTED FROM THE STATEMENT RECORDED DURING SURVEY , THEN THE A.O. MUST HAVE PROCEED FURTHER TO ESTABLISH HIS CASE. ON CE THE ASSESSEE IS RETRACTED FROM THE STATEMENT RECORDED BY THE SURVEY TEAM, THEN THE A.O. WAS DUTY BOUND TO INVESTIGATE THE ISSUE FURTHER TO MAKE THE ADDITION. HE ALSO SUBMITTED THAT ALL THE ADDITIONS MADE BY THE A.O. WERE BASED ON THE STATEMENT RECORDED DURING THE SURV EY AND SUCH STATEMENT HAS NO EVIDENTIARY VALUE IN VIEW OF THE DE CISION OF HON'BLE ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 7 SUPREME COURT IN THE CASE OF CIT VS S.KHADER KHAN S ON 300 ITR 157 (SC). HE HAS ALSO RELIED ON THE DECISION OF HONBLE KERELA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS VS CIT 263 ITR 101 ( KER) AND HE PLEADED TO DELETE THE ADDITION IN ALL THESE GROUNDS . 6. ON THE OTHER HAND, THE LD DR HAS VEHEMENTLY SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW. THE LD DR HAS RELIE D ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF DR. DINESH JAIN VS ITO 45 TAXMANN.COM 442 (BOM) AND THE DECISION OF HONBLE R AJASTHAN HIGH COURT IN THE CASE OF RAMESHWAR LAL MALI VS CIT 132 TAX MAN 629 (RAJ). 7. THE BENCH HAVE HEARD BOTH THE SIDES ON THESE ISSU ES. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON. THE HON' BLE SUPREME COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON CITE D (SUPRA) HAS HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE O F EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT TH E BOOKS OF ACCOUNT DO NOT CORRECTLY DISCLOSE THE CORRECT STATE OF FACT S. IN THIS CASE, THE ASSESSEE MADE STATEMENT DURING THE SURVEY AND SURRE NDERED RS. 60,09,418/- ON ACCOUNT OF EXCESS CASH, RS. 8,04,155 /- UNACCOUNTED DEBTORS, RS. 13,62,000/- EXCESS STOCK, RS. 28,43,40 9/- AND ON ACCOUNT ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 8 OF ADVANCE OF RS. 10.00 LACS TO SHRI PAWAN KUMAR. THE ASSESSEE HAS NOT DISCLOSED THESE AMOUNTS IN THE RETURN OF INCOME AND RETRACTED FROM STATEMENT. IN SUCH A SITUATION, IT IS THE DUTY OF T HE ASSESSING OFFICER TO INVESTIGATE THE ISSUES FURTHER AND ESTABLISH ON EAC H AND EVERY ISSUE ON WHICH THE SURRENDER WAS MADE TO ESTABLISH THE CORRECT NESS OF UNDISCLOSED AMOUNT BY MAKING FURTHER ENQUIRIES. THE A.O. HAS FAILED TO DO SO. HE HAS SIMPLY MADE THE ADDITION ON THE BASIS OF STATEMENT MADE DURING THE SURVEY WHICH ASSESSEE HAD NOT HONOURED. T HE HONBLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS & SONS (SUPRA) HAS ALSO HELD THAT SECTION 133A(3)(III) ENABLE THE AUTHORITY TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE ACT. SECTION 133A, HOWEVER, ENA BLES THE INCOME TAX AUTHORITY ONLY TO RECORD ANY STATEMENT OF ANY P ERSON WHICH MAY BE USEFUL, BUT DOES NOT AUTHORIZE TAKING ANY SWORN STAT EMENT. THUS, IT IS TRITE LAW THAT SECTION 133A DOES NOT EMPOWER ANY INCO ME TAX AUTHORITY TO EXAMINE ANY PERSON ON OATH AND THEN USE IT AS EV IDENCE TO MAKE ADDITION. IN SUCH A SITUATION, NO ADDITION CAN BE M ADE OR SUSTAINED ONLY ON THE BASIS OF THE STATEMENT RECORDED DURING THE S URVEY U/S 133A OF THE ACT. ONCE THE ASSESSEE HAS RETRACTED FROM THE S TATEMENT THEN IT WAS ON THE A.O. TO ESTABLISH BEYOND ANY DOUBT THE IS SUES ON WHICH THE ADDITION HAS BEEN MADE. ONCE THE ASSESSEE HAS SUBMI TTED UP TO DATE ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 9 CASH BOOK AND STOCK REGISTER THEN IT WAS DUTY OF THE ASSESSING OFFICER TO PIN POINT THE DEFECTS IN SUCH BOOKS OF ACCOUNT P ARTICULARLY WITH REGARD TO THE ISSUES, ON WHICH THE STATEMENT WAS REC ORDED DURING THE SURVEY. FURTHER IN THE CASE OF SHRI PAWAN KUMAR, EVE N THE ASSESSING OFFICER RECORDED HIS STATEMENT BUT HE HAS NOT ASKED ANY QUESTION WITH REGARD TO AMOUNT OF ADVANCE OF RS. 10.00 LACS FOR W HICH THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF A PIECE OF PAPER , WHICH WAS NOT SIGNED BY SHRI PAWAN KUMAR. SIMILARLY IN THE CASE OF DEBTORS, ONCE THE ASSESSEE HAS RETRACTED THEN IT WAS THE DUTY OF THE A SSESSING OFFICER TO EXAMINE THESE DEBTORS TO ESTABLISH THE TRUTHFULNESS OF THE DEBT. THE LD DR HAS RELIED ON THE DECISION OF HONBLE BOMBAY HIG H COURT IN THE CASE OF DR. DINESH JAIN VS. ITO (SUPRA) AND DECISIONS OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAMESHWAR LAL MALI VS CIT ( SUPRA), WE HAVE CONSIDERED THE FACTS AND LAW INVOLVED IN THESE CASE S AND WE FIND THAT THE FACTS ARE AT VARIATION FROM THESE CASES, THEREF ORE, THE RATIO LAID DOWN IN THESE CASES ARE NOT APPLICABLE TO THE ASSESS EES CASE. CONSIDERING ALL THESE ASPECTS, WE FIND NO MERIT IN S USTAINING THE ADDITION ONLY BASED ON THE STATEMENT RECORDED DURIN G THE COURSE OF SURVEY. HENCE GROUNDS NO. 1 TO 5 OF THE APPEAL ARE ALLOWED. 8. IN THE GROUNDS NO. 6, 6.1 AND 6.2 THE ISSUE IS R EGARDING SUSTAIN THE PART ADDITION BY INVOKING THE PROVISIONS OF SEC TION 145(3) OF THE ACT ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 10 AND ESTIMATING THE TURNOVER AND G.P.. THE LD. CIT(A) HAS DEALT THE ISSUE BY HOLDING AS UNDER: 9.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF T HE A.O. AS ALSO THE SUBMISSION OF THE APPELLANT. IT MAY BE NOTED THAT T HE A.O. HAS REJECTED THE BOOKS OF ACCOUNTS BY APPLYING PROVISIO NS OF SEC. 145(3) OF IT ACT AND AFTER REJECTION OF BOOKS OF ACCOUNTS ESTIMATED THE SALES FOR RS. 180 LACS AS AGAINST DECLARED SALE OF RS. 17 005305/-. THE A.O. APPLIED G.P. RATE OF 15% AS AGAINST G.P. RATE OF 13 .17% SHOWN BY THE APPELLANT AND ACCORDINGLY TRADING ADDITION OF RS. 4 59578/- WAS MADE. THE A.O. APPLIED PROVISIONS OF SEC. 145(3) BE CAUSE OF THE REASONS THAT THE ASSESSEE WAS INVOLVED IN SALES/PUR CHASES OUTSIDE BOOKS OF ACCOUNTS AS ALSO THAT THE BOOKS OF ACCOUNT S WERE FOUND TO BE INCOMPLETE AND EXCESS STOCK WAS ALSO FOUND. ON T HE OTHER HAND THE APPELLANT CASE IS THAT THE A.O. HAS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS AND THAT EVEN ESTI MATION OF PROFIT BY APPLYING 15% WAS NOT JUSTIFIED AS SUCH PROFIT SHOUL D BE ESTIMATED ON THE BASIS OF PROFIT SHOWN IN THE PAST YEAR. FOR SUC H SUBMISSION THE APPELLANT HAS ALSO PLACED RELIANCE ON VARIOUS CASE LAWS. IN THIS CONNECTION IT MAY BE NOTED THAT AS FAR AS REJECTION OF BOOKS OF ACCOUNTS IS CONCERNED, THE SAME WAS JUSTIFIED IN AS MUCH AS THE BOOKS OF ACCOUNTS WERE MAINTAINED BY THE ASSESSEE W ERE NOT COMPLETE AND IT IS FACT THAT CASH WAS FOUND EXCESS AS ALSO STOCK WAS FOUND EXCESS. IT IS ALSO NOTED THAT THE ASSESSEE HI MSELF ADMITTED THAT PART OF THE SALES/PURCHASES ARE BEING MADE IN UNACC OUNTED MANNER. AS REGARDS ESTIMATION OF PROFIT, AFTER INVOKING TH E PROVISIONS OF SEC. 145(3) OF IT ACT, IT MAY BE STATED THAT IT IS A SET TLED LAW THAT EVEN AFTER INVOKING THE PROVISIONS OF SEC. 145(3), THE A O IS NOT EMPOWERED TO ASSESS THE INCOME AT WHATEVER FIGURES HE WANTS A ND THE AO IS SUPPOSED TO MAKE AN HONEST ESTIMATION EITHER BASED ON THE PAST ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 11 HISTORY OF THE APPELLANTS OWN CASE OR ON THE BASIS OF ANY COMPARABLE CASE. FOR SUCH PROPOSITION RELIANCE IS PLACED ON TH E FOLLOWING CASE LAWS: I) M/S BRIJBHUSHAN LAI PRADHUMAN KUAMR VS. CIT, 11 5 ITR 524 II) SHREE SHANKAR KHANDSARI SUGAR MILLS VS. CIT, 1 93 ITR 669 III) CIT VS DR. A.P. BAHEL 2 DTR 387 (RAJ) IV) CIT VS. SURESH MARBLES PVT. LTD. 18 DTR 118 (R AJ) V) SHRI RAM JHANWAR VS. ITO 98 TTJ,ITAT, JODHPUR VI) AJAY GOYAL VS. ITO 99 TTJ, ITAT, JODHPUR. IN THIS CONNECTION IT MAY BE NOTED THAT IN THE IMM EDIATE PRECEDING YEAR THE APPELLANT HAS SHOWN G.P. RATE OF 13.24%. T HEREFORE IT WILL BE FAIR AND REASONABLE TO APPLY G.P. RATE OF 13.24% ON ESTIMATED SALES OF RS. 1800000/- AND ACCORDINGLY THE GROSS PROFIT I S ARRIVED AT 2383200/- AS AGAINST G.P. RATE SHOWN BY THE ASSESSE E FOR RS. 2240422/-. ACCORDINGLY TRADING ADDITION OF RS. 1427 78/- IS MADE. THE APPELLANT GETS RELIEF OF RS. 316800/-. THE GROUND O F APPEAL IS PARTLY ALLOWED. 9. AFTER HEARING BOTH THE SIDES, WE FIND NO MERITS I N THE PLEADINGS OF THE ASSESSEE, THEREFORE, WE SUSTAIN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 10. IN GROUND NO. 7 OF THE APPEAL, THE ASSESSEE HAD ALTERNATIVELY PLEADED TO GIVE BENEFIT OF TELESCOPING. SINCE THE A DDITION ON ALL FOUR ISSUES RAISED IN GROUNDS NO. 1 TO 5 ARE NOT SUSTAIN ED, HENCE NO SCOPE FOR ANY TELISCOPY. ITA 311/JP/2015_ SATISH CHAND AGARWAL VS ITO 12 11. GROUND NO. 8 OF THE APPEAL ARE GENERAL IN NATUR E AND DOES NOT REQUIRE ANY ADJUDICATION. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/2018. SD/- SD/- DQY HKKJR HKKXPAN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ TK;IQJ TK;IQJ TK;IQJ@ @@ @ JAIPUR FNUKAD@ DATED:- 12 TH APRIL, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SATISH CHAND AGARWAL, TONK. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD- TONK. 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, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 311/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR