ITO, CHURU V. M/s. Salasar Balaji Enterprises, CHURU

ITA 326/JODH/2014

• Counselvise Citation: 32623314 RSA 2014
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Rejection of books of accounts; Business income; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 326 /JODH/2014 (A.Y. 200 9 - 1 0 ) ITO, WARD - 2, CHURU. VS. M/S. SALASAR BALAJI ENTERPRISES, AGUNA BAZAR, SUJANGARH, DISTRICT CHURU. (APPELLANT) PAN NO. ABHFS 9827 P (RESPONDENT) ASSESSEE BY : SHRI SIDDHARTH RANKA. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 11 / 0 8 /201 4 . DATE OF PRONOUNCEMENT : 05 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 21 /03/201 4 OF L D . CIT(A) - III , JAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: - 1. NOT UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS DESPITE NO STOCK REGISTER WAS MAINTAINED AND GRANTING RELIEF BY DELETING TRADING ADDITION MADE BY APPLYING G.P. RATE OF 2% AS AGAINST DECLARED G.P. 2 RATE OF 1.27% WITHOUT CONSIDERING THE FACT THAT IN THE SAME CASE A G.P. RATE OF 1.75% WAS UPHELD IN THE A.Y. 2008 - 09. 2. RESTRICTING THE ADDITION MADE OF RS. 19,34,369/ - TO RS. 1,53,320/ - WITHOUT CONSIDERING THE FINDINGS OF THE A.O. THAT NO COMMISSION WAS REDUCED FROM THE PURCHASES DECLARED IN TRADING ACCOUNT. 3. GRANTING RELIEF BY NOT UPHOLDING THE DISALLOWANCES MADE OUT OF TRAVELLING, SHOP, PETROL AND PRINTING & STATIONERY DESPITE THE FACT THAT NO BILL/VOUCHERS WERE PRODUCED. 2 VIDE GROUND NO. 1 , TH E GRIEVANCE OF THE DEPARTMENT REL A TES TO THE DELETION OF TRADING ADDITION MADE BY THE ASSESSING OFFICER. 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED E RETURN OF INCOME ON 27/09/2009 DECLARING AN INCOME O F RS. 8,106/ - . LATER ON CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DECLARED A GROSS PROFIT OF RS. 3,53,765/ - ON TOTAL SALES OF RS. 2,79,39,121/ - GIVING GROSS PROFIT RATE OF 1.27% AS AGAINST GROSS PROFIT RATE OF 1.55% DECLARED IN THE IMMEDIATE PRECEDING A.Y. 2008 - 09 ON THE TOTAL SALES OF RS. 5,60,96,525/ - . THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE REASON FOR DECREASING THE GROSS PROFIT RATE. THE ASSESSEE SUBMITTED THAT THE PURCHASE AND SALES WERE RECORDED IN THE BOOKS OF ACCOUNTS WHICH WERE AUDITED AND NO DEFECT HAD BEEN POINTED OUT IN THOSE BOOKS, HOWEVER, THE ASSESSING OFFICER NOTED THAT AS PER THE AUDIT REPORT , THE 3 ASSESSEE HAD NOT MAINTAINED QUANTITATIVE DETAILS OF THE TRADING ITEMS AND ALSO DID NOT PRODUCE STOCK REGISTER IN RESPECT OF SUCH ITEMS. THE ASSESSING OFFICER ALSO MENTIONED THAT THOUGH THE PURCHASE AND SALES WERE FULLY VOUCHED, BUT STOCK REGISTER WAS NOT MAINTAINED AND EXPENSES WERE NOT FULLY VOUCHED. HE THEREFORE, BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) REJECTED THE BOOKS OF ACCOUNTS AND APPLIED GROSS PROFIT RATE OF 2% ON THE TOTAL SALES WHICH WORKED OUT TO RS. 5,58,782/ - . ACCORDINGLY, AN ADDITION OF RS. 2,05,017/ - WAS MADE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND THE SUBMISSIONS MADE H AS BEEN INCORPORATED IN PARA 4.2 OF THE IMPUGNED ORDER WHICH ARE REPRODUCED VERBATIM AS UNDER: - THE ASSESSEE APPELLANT IS A PARTNERSHIP FIRM CONSISTING OF TWO PARTNERS NAMELY; SHRI ANIL BERIA AND SHRI SANDEEP BERIA. EARLIER BOTH THE PARTNERS WERE NOT IN THE BUSINESS AND WERE DOING SERVICE AND DO NOT HAVE MUCH EXPERIENCE OF DOING BUSINESS. THE FIRM WAS CO NSTITUTED ON 1 ST APRIL, 2006 AND THIS IS THE THIRD & LAST YEAR OF THE PARTNERSHIP FIRM AS THE PARTNERSHIP FIRM STANDS DISSOLVED W.E.F. 31.03.2009. THE ACTUAL BUSINESS OF THE ASSESSEE FIRM WAS PRIMARILY COMPLETED BY DECEMBER 2008. 1.1. THE BUSINESS STARTED BY T HE FIRM IS ALSO NEW AND THE FIRM IS EARNING INCOME FROM SALE OF MOBILE PHONES, RECHARGE COUPON, SIM CARD, ETC. ETC. ASSESSEE FIRM WAS THE DEALER OF M/S. VODAFONE ESSAR DIGILINK LTD. FOR SUJANGARH TEHSIL IN DISTRICT CHURU FOR THE YEAR UNDER CONSIDERATION. 1.2. THE ASSESSEE FIRM IS MAINTAINING DAY TO DAY BOOKS OF ACCOUNTS, VIZ. CASH BOOK, LEDGER, STOCK REGISTER, BILLS AND VOUCHERS, ETC., ETC. BOOKS OF ACCOUNTS ARE AUDITED UNDER SECTION 44AB OF THE INCOME TAX ACT. 1.3. THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED BY THE I D. ASSESSING OFFICER 4 FOR THE FOLLOWING REASONS: A. FALL IN GP% IN COMPARISON TO PAST YEAR B. NON - MAINTENANCE OF STOCK RECORDS C. SOME EXPENSE VOUCHERS ARE NOT VERIFIABLE 1.4. THE ID. ASSESSING AUTHORITY GROSSLY ERRED IN APPLYING THE PROVISIONS OF SECTION 145(3) OF THE I NCOME TAX ACT WHEN THE ENTIRE PURCHASES AND SALES HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS, DAY TO DAY BOOKS OF ACCOUNT HAS BEEN MAINTAINED, STOCK REGISTER HAS BEEN MAINTAINED, EVERY SALE AND PURCHASE IS VOUCHED, DETAILED AND VERIFIABLE, NO DEFECT IN TH E BOOKS OF ACCOUNTS HAS BEEN NOTICED BY THE ID. ASSESSING OFFICER. 1.5. KINDLY PERUSE THE TRADING A/C, OF THE ASSESSEE APPELLANT FOR THE PAST 2 YEARS: S.NO. A.Y. TURNOVER GROSS PROFIT GP% NET PROFIT NET PROFIT% 1 2008 - 09 5,60,96,525 8,70,252 1.55% 3,29,335 0.59% 2. 2009 - 10 2,79,39,122 3,53,676 1.27% 1,61,591 0.58% 1.5.1. ON PERUSAL OF ABOVE; IT CAN BE NOTICED THAT THE GP% HAS FALLEN FROM THE EARLIER YEARS HOWEVER THERE ARE PLAUSIBLE REASONS FOR IT, WHICH WERE ALSO ADDUCED TO THE ID. ASSESSING OFFICER BUT FOR THE REASONS BEST KNOWN TO HIM HE HAS PREFERRED NOT TO EVEN DISCUSS THE SAME: A. DURING THE YEAR UNDER CONSIDERATION; THE ASSESSEE HAD APPOINTED SUB - DEALERS UNDER IT, I.E. M/S. BHARAT ENTERPRISES & M/S. KRISHNA AGENCIES WHICH WASNT THE CASE IN THE PREVIOUS Y EAR AND THE ASSESSEE APPELLANT HAD TO PASS - ON FIXED MARGIN TO THE SUB - DEALERS AND THE DETAILS OF WHICH ARE AS FOLLOWS: SNO. NAME TURNOVER GROSS PROFIT MARGIN% 1 BHARAT ENTERPRISES, BIDASAR (PAN: AOZPK6053N) 47,82,017 23,910 0.50% 2 KRISHNA AGENCIES, CHHAPAR (PAN: APQPP3158R) 17,11,712 8,559 0.50% TOTAL 64,93,729 32,469 0.50% 3 BALANCE SALE BY ASSESSEE 2,14,45,393 3,21,207 1.50% TOTAL SALE BY ASSESSEE 2,79,39,122 3,53,676 1.27% 5 THUS IN REALITY THE GP% HAS FALLEN TO 1.50% FROM 1.57% WHICH IS A NOMINAL FALL OF JUST 0.07% OVER THE PREVIOUS YEAR AND DESERVES TO HAVE BEEN IGNORED. THE ID. ASSESSING OFFICER HAS APPLIED 2% GP ON GROSS TURNOVER AFTER REJECTING THE BOOKS OF ACCOUNTS. WE SUBMIT THAT EVEN IF THE BOOKS ARE HELD TO BE REJECTED THEN TOO; THE GP SHOULD HAVE BEEN APPLIED ON NET SALES OF THE ASSESSEE AT RS. 21445393/ - AND NOT ON GROSS SALES OF THE ASSESSEE AT RS. 27939122/ - . THE GP% SHOULD HAVE BEEN TAKEN AT 1.50% FOR THE YEAR UNDER CONSIDERATION AND NOT 1.27%. B. BECAUSE OF THE CUT - THROAT COMPE TITION, BEST EFFORTS PUT IN BY THE ASSESSEE; LACK OF SALES, EXTREMELY LOW MARGINS OF THE TRADE, HEAVY PRESSURE CREATED BY THE PRINCIPAL SUPPLIER M/S. VODAFONE ESSAR DIGILINK LTD. OVER THE ASSESSEE, THE ASSESSEE HAD ULTIMATELY NO OPTION BUT HAD TO CLOSE THE BUSINESS OF THE PARTNERSHIP FIRM AND THE SAME WAS DISSOLVED ON 31 S ' MARCH 2009. THE REAL BUSINESS WAS CLOSED BY DECEMBER 2008 ITSELF. C. ON PERUSAL OF THE TRADING A/C. YOUR HONOUR WILL PERUSE THAT ENTIRE STOCK HELD BY THE ASSESSEE WAS LIQUIDATED BY IT PRIOR TO CLOSING OF BUSINESS AS ON 31 ST MARCH 2009. THUS THERE WAS NO POSSIBILITY OF ANY MANIPULATION IN CLOSING PRICE OF STOCK. THE RESULTS DECLARED ARE FAIR AND REASONABLE AND DESERVES TO BE ACCEPTED. D. NP% IS THE SAME AS WAS IN THE PREVIOUS YEAR. 1.6. THE ID. ASSE SSING OFFICER HAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS VERIFIED THE BOOKS OF ACCOUNTS OF THE ASSESSEE APPELLANT AND HIMSELF HAS HELD THAT PURCHASES AND SALES ARE FULLY VOUCHED. WE SUBMIT WHEN OPENING STOCK IS NOT DISPUTED, PURCHASES ARE NOT DISPUTED , SALES ARE NOT DISPUTED AND THERE IS NO CLOSING STOCK THEN WHAT BASIS REMAINS TO REJECT THE BOOKS OF ACCOUNTS. 1.6.1. WE FURTHER SUBMIT THAT DAY TO DAY STOCK REGISTER HAS BEEN MAINTAINED, BOOKS OF ACCOUNTS ARE COMPUTERIZED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED DETAILED REPLIES, WITH WHICH DETAILED INFORMATION STANDS SUBMITTED VIS - A - VIS QUANTITATIVE TALLY OF OPENING PURCHASES, SALES, AND CLOSING STOCK IN QU ANTITY OF DIFFERENT ITEMS AND AMOUNT. IN THE LETTERS IT WAS ALSO MENTIONED THAT STOCK REGISTER HAS BEEN MAINTAINED AND IS BEING SUBMITTED. AS MENTIONED BY THE ID. ASSESSING OFFICER THAT AUDITOR HAS POINTED OUT IN HIS AUDIT REPORT IN PARA 28A OF 3CB THAT QU ANTITATIVE DETAILS HAS NOT BEEN PROVIDED BEFORE HIM BY THE ASSESSEE. 6 IT WILL BE IN A ROUTINE AND TECHNICAL MANNER THAT THE AUDITOR HAS MENTIONED THE SAME BUT THE QUANTITATIVE TALLY HAS BEEN SUBMITTED AND PROVIDED WITH THE BOOKS OF ACCOUNTS PRODUCED BEFORE THE AUDITOR AS WELL AS BEFORE THE ID. ASSESSING OFFICER AND IN EACH AND EVERY REPLY TO THE ASSESSING OFFICER THE COUNSEL FOR THE ASSESSEE HAS ALSO MENTIONED THAT WE ARE PRODUCING THE STOCK REGISTER FOR YOUR PERUSAL. WE ARE SUBMITTING HEREWITH THE STOCK REG ISTER WHERE YOUR HONOUR WILL FIND THAT DETAILED AND SPECIFIC STOCK REGISTER HAS BEEN MAINTAINED BY THE ASSESSEE. 1.7. THAT THE ASSESSEE HAS MAINTAINED STOCK REGISTER AND HAVING MAINTAINED STOCK REGISTER SECTION 145(3) IS NOT APPLICABLE. IN THIS CONTEXT WE RELY ON SOME OF THE CASE LAWS WHERE THE DIFFERENT HON 'BLE COURTS HAVE HELD THAT DECLINE IN G.P. RATE IS NOT A GROUND FOR REJECTION OF THE BOOKS OF ACCOUNT. A. DELHI HIGH COURT IN CIT VS. JAS JACK ELEGANCE EXPORTS [324 ITR 95] B. KERALA HIGH COURT IN M. DURAI RAJ V S. CIT [83 ITR 484]: C. RAJASTHAN HIGH COURT IN MALANI RAMJIVAN JAGANNATH VS. ACIT [207 CTR 19]: D. MYSORE HIGH COURT IN VIJAYA TRADERS VS. CIT[74 ITR 279]: E. CALCUTTA HIGH COURT IN ASHOKE REFRACTORIES P. LTD. VS. CIT [279 ITR 457]: F. PUNJAB & HARYANA HIGH COURT IN PANDIT BROS VS. CIT [26 ITR 159] G. PUNJAB & HARYANA HIGH COURT IN CIT VS. OM OVERSEAS [315ITR 185] H. GAUHATI HIGH COURT IN ALUMINIUM INDUSTRIES (P) LTD. VS. CIT 80 TAXMAN 184 I. IT AT DELHI IN IAC VS. USHNAK MA L MADAN LA L [34 TTJ 8]: J. ITAT JODHPUR IN MADAN LAL VS. ITO [99 TTJ538] K. ITAT JODHPUR IN ITO VS. ARUN KUMAR GUPTA [103 TTJ 134]: I. ITAT INDORE IN PRAHALADDAS HARIKISHAN VS. ACIT [60 TTJ 27]: M. ITAT NAGPUR IN MANIKLAL KANMAL VS. ITO [12 TTJ 381]: N. ITAT MADRAS IN IBRAHIM ELECTRIC CO. VS. SECOND ITO [9 TTJ 493]: O. ITAT BANGALORE IN DCIT VS. GAJANAN TRADERS [104 TTJ 1030]: P. ITAT JODHPUR IN ITO VS. PRAKASH CHAND [100 TTJ 639]: Q. ITAT JODHPUR IN GANESH FOUNDRY VS. ITO [78 TTJ 736]: R. ITAT JAIPUR IN TRIVENI PHARMA VS. ITO [92 ITD 125] S. ITAT ALLAHABAD IN ITO VS . MANOHAR CLOTH HOUSE [16 TTJ 538] T. ITAT JODHPUR IN HARIDAS PARIKH VS . ITO [113 TTJ 274] U. ITAT HYDERABAD IN VISHAL INFRASTRUCTURE LTD. VS. ACIT [104 ITD 537] V. ITAT ALLAHABAD IN MISRI PRASAD JAI RAM VS. ITO 10 TTJ 382 W. ITAT NAGPUR IN AMBALAL HARICHAND & CO. VS. ITO 9 TTJ 363 7 X. ITAT JAIPUR IN CHIPPA AHMADJI VS. ITO 33 TTJ 61 Y. ITAT MUMBAI IN NARENDRA MAFATLAL MEHTA VS. ITO 59 TTJ 165 Z IT AT JAIPUR IN HARLAL HEMRAJ VS. ITO 16 TTJ165 AA. IT AT JODHPUR IN GANESH FOUNDRY VS. ITO 67 TTJ 4 34 BB. ITAT HYDERABAD IN ETCO ENGINEERING CO. VS. ITO 27 TTJ 350 CC. ITAT AHMEDABAD IN PUSHPANJALI DYEING & PRINTING MILLS (P) LTD. VS. JCIT 72 TTJ 886 1.8. NON - VERIFICATION OF FEW EXPENSES VOUCHERS CANNOT BE THE BASIS FOR REJECTION OF BOOKS OF ACCOUNTS PARTICULARLY WHEN NO SPECIFIC DETAIL HAS BEEN POINTED OUT AS TO WHICH VOUCHER IS NOT VERIFIABLE. IT IS A COMMENT PASSED BY THE ID. ASSESSING OFFICER WITHOUT PROPER PERUSAL AND MENTIONED FOR THE SAKE OF MENTIONING AND DESERVES TO BE IGNORED. 1.9. THE HBLE CIT ( A) IN ASSESSEES FIRMS OWN CASE VIDE ORDER DATED 13.07.2012 IN ITA 99/JP/10 - 11 FOR THE ASSESSMENT YEAR 2008 - 2009 HAS UPHELD REJECTION OF BOOKS OF ACCOUNTS AND APPLIED GP% OF 1.75%. UNDER THESE FACTS AND CIRCUMSTANCES WE REQUEST YOUR HONOUR TO DELETE THE UN CALLED FOR TRADING ADDITION MADE BY THE ID. ASSESSING OFFICER ON AD - HOC BASIS AND IN WRONGLY REJECTING THE BOOKS OF ACCOUNTS WITHOUT APPRECIATING THE PLAUSIBLE REASONS GIVEN BEFORE HIM AND IN IGNORING THE SAME. 5. THE LEARNED CIT(A), AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT MAINLY ON ACCOUNT OF THE REASONS THAT THE ASSESSEE HAD NOT MAINTAINED QUANTITATIVE DETAILS OF TRADING ITEMS AS ALSO THAT THE STOCK REGIS TER WAS NOT PRODUCED , A NOTHER DEFECT WAS POINTED OUT THAT THE EXPENSES WERE NOT FULLY VOUCHED WHILE THE ASSESSEES CASE WAS THAT THE BOOKS OF ACCOUNTS WERE MAINTAINED ON DAY TO DAY BASIS WHICH WERE AUDITED U/S. 44AB OF THE ACT AND THE FINDING OF THE ASSESSING OFFICER THAT STOCK REGISTER WAS NOT MAINTAINED WAS FACTUALLY INCORRECT INASMUCH AS THE STOCK REGISTER HAD BEEN MAINTAINED AND THE QUANTITATIVE DETAILS 8 WERE SUBMITTED BEFORE THE ASSESSING OFFICER EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE LD. CIT(A) OBSERVED THAT IN THIS CASE, THE PURCHASE AND SALES WERE NOT DISPUTED BY THE ASSESSING OFFICER AND THE FINDINGS THAT THE QUANTITATIVE DETAILS OF TRADING ITEMS WERE NOT MAINTAIN ED WAS BASED ON THE AUDITOR S REPORT, BUT SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HA D PRODUCED SUCH DETAILS BEFORE THE ASSESSING OFFICER, WHICH WAS EVIDENT FROM THE WRITTEN SUBMISSIONS OF THE ASSESSEE BEFORE THE ASSESSING OFFICER DATED 26/07/2011 & 16/09/2011 , T HEREFORE, FINDING OF THE ASSESSING OFFICER THAT QUANTITATIVE DETAILS/STOCK REGISTER WAS NOT MAINTAINED FACTUALLY CORRECT. THE LD. CIT(A) OBSERVED THAT THE BOOKS OF ACCOUNTS AND VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER, WHO HAD NOT POINTED OUT ANY SPECIFIC CLAIM OF EXPENDITURE WHICH WAS NOT SUPPORTED BY BILLS/VOUCHERS, WHICH INDICATED THAT PRIMA - FACIE IN THE ASSESSEE S CASE , NO CONDITIONS WERE FOUND TO BE EXISTING WHICH MAY JUSTIFY INVOKING THE PROVISIONS OF SECTION 1 45(3) OF THE ACT. THE LD. CIT(A) FURTHER OBSERVED THAT SALES AND PURCHASES WERE PROPERLY VOUCHED, NO SPECIFIC EXPENDITURE WAS REPORTED TO BE OF UN - VOUCHED NATURE , THE BOOKS OF ACCOUNTS WERE AUDITED. THEREFORE, INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT WAS NOT JUSTIFIED. REL I A NCE WAS PL A CED ON THE JUDGMENT OF THE HON'BLE 9 JURISDICTIONAL HIGH COURT IN THE CASE OF MALANI RAMJIVAN JAGANNATH VS. ACIT (2009) 316 ITR 120 . ACCORDINGLY , THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW . IT WAS FURTHER SUBMITTED THAT WHEN THE ENTIRE PURCHASE & SALES HAD BEEN RECORDED IN THE DAY TO DAY BOOKS OF ACCOUNTS, STOCK REGISTER HAD BEEN MAINTAINED, EVERY SALE AND PURCHASE WAS VOUCHED AND NO DEFECT WAS POINTED OUT IN THE BOOKS OF ACCOUNTS , THE APPLICATION OF PROVISIONS OF SECTION 1 45(3) WAS NOT JUSTIFIED. IT WAS FURTHER SUBMITTED THAT THERE WAS A SLIGHT FALL IN THE GROSS PROFIT RATE, HOWEVER, THERE WERE PLAUSIBLE REASONS FOR IT, WHICH WERE ADDUCED TO THE ASSESSING OFFICER WHO FOR THE REASONS BEST KNOWN TO HIM HAD NOT PREFERRED EVEN TO DISCUSS TH E SAME. IT WAS STATED THAT DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE APPOINTED SUB - DEALER S AND HAD TO PASS ON FIXED MARGIN TO THE SUB - DEALERS , THEREFORE, GROSS PROFIT RATE HAD FALLEN. IT WAS CONTENDED THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VERIFIED THE BOOKS OF ACCOUNTS AND HIMSELF HAD HELD THAT THE PURCHASE & SALES WERE FULLY VOUCHED, THEN WHAT BASIS REMAIN ED TO REJECT THE BOOKS OF ACCOUNTS. IT WAS POINTED OUT THAT THE 10 ASSESSEE HAD MAINTAINED STOCK REGISTER , THER EFORE, THE SLIGHT DECLINE IN GROSS PROFIT RATE WAS NOT A GROUND TO REJECT THE BOOKS OF ACCOUNTS U/S. 145(3) OF THE ACT AND THE LD. CIT(A) RIGHTLY DEL E TED THE TRADING ADDITION MADE BY THE ASSESSING OFFICER. RELIANCE WAS PLACED ON THE CASE LAWS , WHICH WERE RELIED BEFORE THE LD. CIT(A). 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE SALES & PURCHASE S OF THE ASSESSEE WERE FULLY VOUCHE D AND THIS FACT WAS ACCEPTED BY THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER I N THE PRESENT CASE , IT APPEARS THAT THE QUANTITATIVE DETAILS WERE NOT PRODUCED BEFORE THE AUDITORS BY THE ASSESSEE, HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE SAME WERE PRODUCED BEFORE THE ASSESSING OFFICER , WHO HAD NOT POINTED ANY M I S TAKE IN THOSE DETAILS AND EVEN NO SPECI F I C DEFECT WAS NOTICED IN THE BOOKS OF ACCOUNTS MAINTAINED IN THE REGULAR COURSE OF BUSINESS. THE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC INSTANCE WHERE THE EXPENSES WERE NOT INCURRED FOR THE BUSINESS PURPOSE OR THOSE EXPENSE S WERE EXCESSIVE. THEREFORE, THE REJECTION OF BOOKS OF ACCOUNTS U/S. 145(3) OF THE ACT WAS NOT JUSTIFIED AND MOREOVER, THE ASSESSEE EXPLAINED THE SLIGHT FALL IN THE GROSS PROFIT RATE WHICH WAS MAINLY ON ACCOUNT OF 11 APPOINTING OF SUB - DEALERS. THE SAID EXPLANATION WAS NOT REBUTTED, THEREFORE, TRADING ADDITION MADE BY THE ASSESSING OFFICER BY APPLYING AN IMAGINARY GROSS PROFIT RATE OF 2% WAS NOT JUSTIFIED AND THE LD. CIT(A) RIGHTLY DEL E TED THE SAME. WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 8 . THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE RELIEF ALLOWED OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION . 9 . FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , NOTICED THAT THE ASSESSEE HAD RECEIVED COMMISSION OF RS. 19,34,369 / - AS PER FORM - 26 AS AND AS SUCH COMMISSION WAS NOT SHOWN IN THE P & L ACCOUNT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE COMMISSION WAS NOT SHOWN . THE ASSESSEE SUBMITTED THAT THE COMMISSION HAD BEEN REDUCED FROM THE PURCHASES . HOWEVER, T HE ASSESSING OFFICER WAS OF THE VIEW THAT THE PURCHASES SHOWN WERE VERIFIABLE FROM THE BOOKS OF ACCOUNTS AND THAT THE CONTENTION OF THE ASSESSEE THAT THE COMMISSION HAD BEEN DEDUCTED FROM THE PURCHASE S WAS NOT CORRECT. ACCORDINGLY, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 90,34,369/ - . 12 10 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - 2. THE ID. ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAS NOT DISCLOSED COMMISSION INCOME IN THE RETURN OF INCOME FILED. [COMMISSION INCOME OF RS. 1,934,369/ - ] 2.1 WE ARE SURPRISED BY THE ADDITION MADE BY THE ID. ASSESSING OFFICER; AS SUBMITTED HEREINABOVE THE ASSESSEE FIRM WAS THE DEALER OF M/S. VODAFONE ESSAR DIGILINK LTD. FOR SUJANGARH TEHSIL IN DISTRICT CH UR U FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FIRM RECEIVES COMMISSION ON THE BASIS OF PURCHASES AFFECTED BY IT FROM M/S. VODAFONE ESSAR DIGILINK LTD., GAURAV TOWER, MALVIYA NAGAR, JAIPUR 302017. 2.2 THE REGULAR PRACTICE OF THE ASSESSEE APPELLANT FIRM SINCE BEGINING WAS TO REDUCE THE COMMISSION INCOME RECEIVED FROM M/S. VODAFONE ESSAR DIGILINK LTD. FROM THE PURCHASE A/C. AS PER THE PAST PRACTICE. WE ARE ENCLOSING HEREWITH COPY OF P&L A/C. FOR THE YEAR ENDING 31.03.2007, 31.03.2008 AND 31.03.2009 ON PER USAL WHEREOF YOUR HONOUR WILL NOTICE THAT NO COMMISSION INCOME HAS BEEN SHOWN IN THE CREDIT SIDE; HOWEVER ENTIRE COMMISSION RECEIVED HAS BEEN REDUCED FROM THE PURCHASE A/C. 2.3 THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM WERE ALSO SCRUTINIZED U/S. 143(3) B Y THE ID. ASSESSING OFFICER AND AFTER DETAILED VERIFICATION AND SATISFACTION THE ID. ASSESSING OFFICER DID NOT INTERFERED WITH THE COMMISSION INCOME DECLARED BY THE ASSESSEE APPELLANT. 2.4 THE ID. ASSESSING OFFICER IS REFERRING TO THE RETURN FILED BY THE A SSESSEE APPELLANT FOR THE YEAR ENDING 31.03.2010 WHEREIN IT HAS SHOW N COMMISSION & BROKERAGE INCOME SEPARATELY. WE HAVE ALREADY SUBMITTED THAT THE ASSESSEE FIRM HAD CLOSED THE BUSINESS DURING THE YEAR UNDER CONSIDERATION VIDE DISSOLUTION DEED DATED 31.03.2 009. THERE WAS NO 13 BUSINESS AFTER 31.03.2009; HOWEVER CERTAIN COMMISSION & BROKERAGE WAS PAID TO THE ASSESSEE FIRM IN SETTLEMENT OF ITS FINAL ACCOUNTS BY M/S. VODAFONE ESSAR DIGILINK LTD. AND SINCE THERE WAS NO OPENING STOCK, PURCHASES, ETC. IT HAD TO BE SHOWN SEPARATELY. THUS THERE IS NO BASIS TO COMPARE THE RESULTS DECLARED BY THE ASSESSEE APPELLANT FOR THE YEAR ENDING 31.03.2010 WHEN THE BUSINESS STANDS CLOSED. ON THE CONTRA R Y THE ID. ASSESSING OFFICER SHOULD HAVE COMPARED T HE RESULTS DECLARED FOR THE CURRENT ASSESSMENT YEAR WITH THOSE OF PREVIOUS ASSESSMENT YEARS, I.E. FOR 2007 - 2008 & 200 8 - 2009 AND ON PERUSAL OF THE SAME; HE WOULD HAVE UNDERSTOOD THE ACCOUNTING PRACTICE UNDERTAKEN BY THE ASSESSEE APPELLANT. 2.5 WE FURTHER S UBMIT THAT ULTIMATELY THERE WILL NOT BE ANY CHANGE IN THE NET PROFIT OF THE ASSESSEE FIRM WHETHER COMMISSION INCOME IS SHOWN AT THE CREDIT SIDE OF INCOME OR THE COMMISSION INCOME IS REDUCED FROM THE PURCHASE COST AS THE RESULT WOULD STILL BE SAME. 2.6 KIND LY PERUSE THE COMPUTATION OF INCOME WHEREIN THE ASSESSEE APPELLANT HAS DISCLOSED THE COMMISSION INCOME RECEIVED FROM M/S. VODAFONE ESSAR DIGILINK LTD AT RS. 1934369/ - AND TAX DEDUCTED AT SOURCE BY THEM AT RS. 163620/ - . 2.7 IT APPEARS THAT THE ID. ASSESSING OFFICER HAS NOT UNDERSTOOD THE ACCOUNTING TREATMENT DONE BY THE ASSESSEE APPELLANT. IT IS NOT POSSIBLE FOR ASSESSEE APPELLANT TO IGNORE SUCH COMMISSION INCOME FROM DECLARATION IN ITS TRADING AND PROFIT & LOSS A/C. WHEN THE ONLY/MAJOR SOURCE OF INCOME IS O NLY FROM SUCH COMMISSION INCOME . 2.8 THE ASSESSEE HAD FOLLOWING SALES DURING THE YEAR: VAT 0% = 26769249 & VAT4% = 1169872, TOTAL SALES = 27939121/ - , WHEREAS NET PURCHASES MADE DURING THE YEAR WERE 26,956,667/ - . THESE PURCHASES ARE BOOKED AFTER CREDITING N ET COMMISSION RECEIVED FROM M/S. VODAFONE ESSAR DIGILINK LTD AT RS. 1,454,53 7/ - . 14 2.9 THE ASSESSEE APPELLANT HAS BOOKED THE COMMISSION INCOME UNDER THE HEAD CLAIM A/C. AND APART FROM RS. 1,454,537/ - THE ASSESSEE APPELLANT HAS TRANSFERRED COMMISSION TO ITS S UB - DEALERS; M/S. KRISHNA AGENCIES AT RS. 73656/ - AND M/S. BHARAT ENTERPRISES AT RS. 51021/ - TOTALING RS. 124677/ - . FURTHERMORE I F THE ASSESSEE APPELLANT HAD WRITTEN OFF A SUM OF RS. 201835/ - FROM M/S. SHIVAM SALES, SUJANGARH. 2.10 THUS ON PERUSAL OF ABOVE; IT IS CLEAR THAT THE ID. ASSESSING OFFICER HAS WRONGLY INTERPRETED THE SYSTEM OF BOOKING OF ACCOUNTS BY THE ASSESSEE APPELLANT AND ON WRONG INFERENCE HAS HELD THAT THE ASSESSEE APPELLANT HAS NOT BOOKED COMMISSION INCOME IN ITS BOOKS; WHEREAS THE ASSESSEE APPELLANT HAS CLEARLY DONE SO BY WAY OF REDUCING THE PURCHASE COST, DEBITING COMMISSION PAID TO SUB - DEALERS FROM COMMISSION RECEIVED, ETC. UNDER THESE FACTS AND CIRCUMSTANCES WE REQUEST YOUR HONOUR TO DELETE THE UNCALLED FOR ADDITION MADE BY THE ID. ASSESSING OFFICER . 11 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION BY OBSERVING IN PARA 5 . 3 OF THE IMPUGNED ORDER AS UNDER: - I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FINDINGS OF THE AO. IT MAY BE NOTED THAT THE ASSESSEE FIRM WAS DEALER OF VODAFONE AND SUPPLIED SIM CARDS AND RECHARGE COUPONS OF THIS COMPANY ON RETAIL BASIS. THERE IS NO DISPUTE ON THE FACT THA T THE ASSESSEE RECEIVED COMMISSION OF RS. 1934369/ - AS PER 26AS AND AS PER AO SUCH COMMISSION WAS NOT SHOWN IN THE P&L ACCOUNT. THOUGH DURING THE ASSESSMENT PROCEEDINGS THE ASSESSES SUBMITTED THAT AS A CONSISTENT ACCOUNTING PRACTICE SUCH COMMISSION RECEIVE D FROM M/S VODAFONE WAS REDUCED FROM THE PURCHASE COST BUT THE AO WAS NOT CONVINCED WITH SUCH EXPLANATION AND ADDED SUCH AMOUNT TO THE TOTAL INCOME. THE APPELLANT CASE IS THAT SUCH COMMISSION WAS RECEIVED ON THE BASIS OF PURCHASES MADE BY THE ASSESSEE FROM M/S VODAFONE AND THAT AS A REGULAR PRACTICE THE APPELLANT WAS REDUCING THE COMMISSION INCOME 15 RECEIVED FROM M/S VODAFONE FROM THE PURCHASE AMOUNT. THE APPELLANT HAS ALSO FILED COPY OF P&L ACCOUNT FOR THE PERIOD ENDING ON 31.07.2007, 31.03.2008 AND 31.03.20 09 WHICH INDICATED THAT NO COMMISSION INCOME HAS BEEN SHOWN IN THE CREDIT SIDE. AS REGARDS THE AOS FINDING THAT IN THE PERIOD ENDING ON 31.03.2010, THE APPELLANT HAS SHOWN COMMISSION INCOME SEPARATELY, IT IS SUBMITTED THAT THE ASSESSEE FIRM HAS CLOSED THE BUSINESS DURING THE YEAR UNDER CONSIDERATION VIDE DISSOLUTION DEED DATED 31.03.2009 AND THAT THERE WAS NO BUSINESS AFTER 31.03.2009. IT IS FURTHER STATED THAT AFTER CLOSER OF SUCH BUSINESS CERTAIN COMMISSION AND BROKERAGE WAS PAID TO THE ASSESSEE IN SETTL EMENT OF ITS FINAL ACCOUNTS AND AS THERE WAS OPENING STOCK / PURCHASES THEREFORE SUCH COMMISSION HAS TO BE SHOWN SEPARATELY IN THE P&L ACCOUNT. THE APPELLANT FURTHER SUBMITTED THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE NET PURCHASES WERE BOOKE D FOR RS. 26956667/ - AFTER CREDITING / REDUCING COMMISSION INCOME RECEIVED FROM M/S VODAFONE FOR RS. 1454537/ - . AS REGARDS THE DIFFERENCE OF COMMISSION RECEIVED AMOUNTING TO RS. 1934369/ - AND COMMISSION REDUCED FROM THE PURCHASE ACCOUNT AMOUNTING TO RS. 1 454537/ - , THE APPELLANT SUBMITTED THAT SOME OF COMMISSION WAS DIRECTLY TRANSFERRED TO THE SUB - DEALERS NAMELY M/S KRISHNA AGENCIES, RS. 73656/ - AND M/S BHARAT ENTERPRISES RS. 51021/ - AND RS. 201835/ - TO M/S SHIVAM SALES, SUJANGARH. IT WAS ACCORDINGLY CLAIME D THAT THE AO HAS WRONGLY INTERPRETED THE SYSTEM OF BOOKING OF ACCOUNTS BY THE ASSESSEE AND ACCORDINGLY ADDITION WAS WRONGLY MADE. ON CAREFUL CONSIDERATION OF ALL RELEVANT FACTS IT IS NOTED THAT THERE IS NO DISPUTE ON THE FACT THAT THE APPELLANT HAS RECEIV ED COMMISSION OF RS. 1934369/ - . IT IS ALSO NOTED THAT OUT OF SUCH COMMISSION OF RS. 1934369/ - , AN AMOUNT OF RS. 1454537/ - HAS BEEN REDUCED FROM THE PURCHASE ACCOUNT AND ACCORDINGLY THE NET PURCHASES WERE BOOKED FOR RS. 26956667/ - WHICH IS EVIDENCED FROM TR ADING AND P&L A/C OF THE APPELLANT. IN FACT THE TOTAL PURCHASES OF M/S SALASAR BALAJI ENTERPRISES AS PER PURCHASE REGISTER WERE FOR RS. 28411204/ - AND AFTER REDUCING COMMISSION OF RS. 1454537/ - THE NET PURCHASES DEBITED IN THE TRADING ACCOUNT WERE FOR RS. 26956667/ - . IT IS ALSO NOTED THAT OUT OF THE TOTAL COMMISSION RECEIPT OF RS. 1934369/ - THE APPELLANT HAS ALSO PAID COMMISSION TO M/S KRISHNA AGENCIES FOR RS. 73656/ - , RS. 51021/ - TO M/S BHARAT ENTERPRISES AND TO M/S SHIVAM SALES FOR RS. 201835/ - , TOTALING F OR RS. 326512/ - . IN THIS MANNER OUT OF TOTAL COMMISSION INCOME OF RS. 1934369/ - , AN AMOUNT OF RS. 1454537/ - WAS DIRECTLY REDUCED FROM THE 16 PURCHASE ACCOUNT AND AN AMOUNT OF RS. 326512 / - WAS DI RECT L Y PAID TO THE SUB - DEALERS AND ACCORDINGLY COMMISSION INCOME OF RS. 1781049/ - WAS APPROPRIATED. HOWEVER EVEN AFTER SUCH APPROPRIATION THE SURPLUS AMOUNT OF COMMISSION AMOUNTING TO RS. 153320/ - (1934369 - 1781049) WAS TO BE SHOWN AS INCOME WHICH HAS NOT BEEN REFLECTED IN THE P&L A/C. THESE FACTS WERE BROUGHT TO THE NO TICE OF THE LD. A.R. OF THE APPELLANT AND THE LD. A.R. ALSO ACCEPTED THE SAME. ACCORDINGLY OUT OF TOTAL ADDITION OF RS. 1934369/ - , ADDITION TO THE EXTENT OF RS. 153320/ - IS CONFIRMED. THE APPELLANT ACCORDINGLY GET RELIEF OF RS. 1781049/ - (1934369 - 153320) . NOW THE DEPARTMENT IS IN APPEAL . 12. LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO JUSTIFY THE CLAIM THAT THE COMMISSION WAS REDUCED FROM THE PURCHASES, THEREFORE, THE ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION. 13 IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER. 14 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, IT APPEARS THAT ASSESSEE FURNISHED THE DETAILS OF COMMISSION BEFORE THE LD . CIT(A) , WHO VERIFIED FROM THOSE DETAILS AND CAME TO THE 17 CONCLUSION THAT AN AMOUNT OF RS. 14,54,537/ - WAS DIRECTLY REDUCED FROM THE PURCHASE ACCOUNT AND AN AMOUNT OF RS. 3,26,512/ - WAS PAID TO THE SUB - DEALERS. ACCORDINGLY, COMMISSION INCOME OF RS. 17,81,049/ - (RS. 14,54,537/ - + RS. 3,26,512/ - ) WAS APPROPRIATED . N OTHING CONTRARY TO THE SAID OBSERVATIONS OF THE LD. CIT(A) HAS BEEN BROUGHT ON RECORD BY THE REVENUE - DEPARTMENT. THEREFORE, LD. CIT(A) WAS FULLY JUSTIFIED IN SUSTA INING THE ADDITION OF RS. 1,53,320/ - (RS. 19,34,369/ - ( - ) RS. 17,81,049/ - ) . W E DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 15 NEXT ISSUE VIDE GROUND NO. 3 RELATES TO THE DELETION OF DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF THE TRAVELLING, SHOP, PETROL AND PRINTING & STATIONERY EXPENSES. 16 FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE HAD INCURRED THE FO LLOWING EXPENSES: - I) TRAVELLING EXPENSES RS. 10,837/ - II) SHOP EXPENSES RS. 3,800/ - III) PETROL EXPENSES RS. 4,625/ - IV) PRINTING & STATIONERY RS. 5,346/ - __________ TOTAL RS. 24,608/ - 18 THE ASSESSING OFFICER DISALLOWED 30% OF THE ABOVE EXPENSES BY OBSERVING THAT THE ASSESSEE HAD NOT PRODUCED BILLS/VOUCHERS IN RESPECT OF SUCH EXPENSES. ACCORDINGLY, AN ADDITION OF RS. 7,382/ - WAS MADE. 17 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - 3. THE LD. ASSESSING OFFICER HAS GROSSLY ERRED IN DISALLOWING OUT OF EXPENSES INCURRED ON TRAVELLING, SHOP, PETROL AND PRINTING & STATIONERY @ 30%. 3.1 KINDLY PERUSE THE FOLLOWING CHART IN THIS REGARD. SNO. YEAR TRAVELLING SHOP/SUNDRY PETROL PRINTING 1 2009 10,837 3,800 4,625 5,346 2 RECEIPTS 2,79,39,122 2,79,39,122 2,79,39,122 2,79,39,122 3 % OF RECEIPT 0.039% 0.014% 0.017% 0.019% 4 2008 40,966 16,130 19,006 12,950 5 RECEIPTS 5,60,96,525 5,60,96,525 5,60,96,525 5,60,96,525 6 % OF RECEIPT 0.073% 0.029% 0.034% 0.023% 7 INCREMENT % BASIS - 46.89% - 52.70% - 51.14% - 17.11% 3.2. ON PERUSAL OF ABOVE CHART IT CAN BE DEDUCED THAT % OF EXPENSES VIS - A - VIS RECEIPTS IS VERY NOMINAL. 3.3. IT CAN ALSO BE NOTICED THAT ON OVERALL BASIS IN COMPARISON TO IMMEDIATE PAST YEAR THE EXPENSES INCURRED ARE IN FACT SUBSTANTIALLY LESS AND IT SHOWS THAT EXPENSES INCURRED WERE NECESSARY AND FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. 3.4. THE OBSERVATIONS OF THE ID. ASSESSING OFFICER ARE GENERAL IN NATURE AND NO PIN - POINTED MISTAKE HAS BEEN POINTED OUT. 19 3.5. WE ARE ENCLOSING THE LEDGER ACCOUNTS OF THE AFORESAID EXPENSES FOR YOUR HONOURS PERUSAL. THE HON BLE CIT (A) IN ASSESSEES FIRMS OWN CASE VIDE ORDER DATED 13.07.2012 IN ITA 99/JP/10 - 11 FOR THE ASSESSMENT YEAR 2008 - 2009 HAS DELETED THE ENTIRE DISALLOWANCE MADE BY THE L D. ASSESSING OFFICER. 18 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNTS INCLUDING BILLS AND VOUCHERS WHICH WAS EVIDENCED FROM ASSESSEES LETTER TO THE ASSESSING OFFICER DATED 26/07/2011. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY INSTANCE OF EXPENDITURE WHICH WERE EITHER NOT SUPPORTED BY BILL/VOUCH ER OR NOT FOUND RELATING TO THE BUSINESS OF THE ASSESSEE , T HEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS . ACCORDINGLY, THE SAME WAS DELETED. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. LAXMI ENGINEERING INDUSTRIES VS. CIT REPORTED AT 298 ITR 230. NOW THE DEPARTMENT IS IN APPEAL. 19 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN OUR OPINION, 20 THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE IMPUGNED ADDITION BECAUSE THE ASSESSING OFFICER WHILE MAKING THE ADHOC DISALLOWANCE @ 30 % OF THE EXPENSES CLAIMED BY THE ASSESSEE HAD NOT POINTED OUT ANY SPECIFIC INSTANCE WHERE EXPENSES WERE NOT INCURRED FOR THE BUSINESS PURPOSES OR THE EXPENSES WERE NOT FULLY VOUCHED. WE THEREFORE, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL AP PEAL. 20 IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 05 TH SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05 TH SEPTEMBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .