The ITO, Ward-5(3), Surat V. Shri Mayank Jain, Surat

ITA 427/AHD/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1157 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Keywords: Rejection of books of accounts; Principle of natural justice; Corroborative evidences
• Section: 143(3); 142(1); 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, A M. ITA NO.427/AHD/2012 ASST. YEAR:2007-08 INCOME-TAX OFFICER, WARD-5(3), SURAT. VS SHRI MAYANK JAIN, VANDAN SAREE FASHIOS, 508, NEW TEXTILE MARKET, RING ROAD, SURAT. (APPELLANT) (RESPONDENT) PA NO.ADXPJ8732G APPELLANT BY SHRI NARENDRA SINGH, SR.DR RESPONDENT BY SHRI HARDIK VORA, AR DATE OF HEARING: 16.9.2015 DATE OF PRONOUNCEMENT: 20/11/2015 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF CIT(A) IV, SURAT, DATED 20.10.2011. THE ASSESSMENT ORDER WAS FRAMED U/S 143(3) OF I.T. ACT, 1961 (IN SHORT THE ACT) ON 31.1 2.2009, FOR AY 2007- 08, BY INCOME-TAX OFFICER, WARD-5(3), SURAT. FOLLO WING GROUNDS HAVE BEEN RAISED IN THIS APPEAL BY REVENUE :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDI TION OF RS.14,84,770/- ON ACCOUNT OF G.P. ADDITION MADE BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDI TION OF ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 2 RS.59,161/- ON ACCOUNT OF UNEXPLAINED EXPENSES MADE BY THE AO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A)-IV, SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CI T(A)-IV, SURAT MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF ART SILK CLOTHS. RETURN OF INCOME HAS FILED ON 31.10.20 07 DECLARING TOTAL INCOME OF RS.2,95,350/-. ASSESSEES BOOKS OF ACCOUN TS HAVE BEEN AUDITED UNDER SECTION 44AB OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 29.08.2008 AND WAS DULY SERVED ON THE ASSESSEE. NOT ICE U/S 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED ON 7 .1.2009 REQUIRING THE ASSESSEE TO FURNISH DETAILS BUT TILL 9.9.2009 N O DETAILS WERE FURNISHED. THE ASSESSEE DID NOT TURN UP ON VARIOUS DATES GIVEN BY THE ASSESSING OFFICER AND FINALLY WHEN THE ASSESSING OF FICER GAVE FINAL NOTICE TO THE ASSESSEE THAT IF THE DETAILS ARE NOT FURNISHED BY 18.9.2009 ASSESSMENT WOULD BE FINALIZED U/S 144 OF THE ACT, THEREAFTER SOME OF THE INFORMATION WERE SUBMITTED B UT QUANTITATIVE DETAILS WERE SUBMITTED ON 30.12.2009 ONLY I.E. A DA Y BEFORE THE LAST DAY FOR COMPLETION OF ASSESSMENT AND THAT TOO AFTER THE SHOW CAUSE NOTICE WAS RECEIVED BY ASSESSEE ON 28 TH DECEMBER, 2009. DUE TO THIS REASON THE ASSESSING OFFICER INVOKED THE PROVI SIONS OF SECTION 145 AND REJECTED THE BOOKS OF ACCOUNTS AND ASSESSED THE INCOME OF ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 3 THE ASSESSEE AT RS.18,83,848/- AFTER MAKING ADDITIO NS OF RS.15,88,498/- ON ACCOUNT OF FOLLOWING :- I) G.P. ADDITION OF RS.14,84,770/- BY ADOPTING GP R ATE @ 18% AGAINST GP RATE SHOWN BY THE ASSESSEE AT 10.10% . II) DISALLOWANCE OF EXPENSES FOR PERSONAL PURPOSES AT RS.19,567/- III) DISALLOWANCE OF EXPENSES FOR LACK OF SUPPORTIN G DOCUMENTARY EVIDENCES AT RS.84,161/- 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE CIT(A) WHO DELETED THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT O F ESTIMATED GP RATE, CONFIRMING THE DISALLOWANCE OF RS.19,567/- FO R PERSONAL ELEMENT IN THE EXPENSES REDUCED THE DISALLOWANCE OF EXPENSE S FOR THE LACK OF PROPER SUPPORTING FROM RS.84,161/- TO RS.25,000/-. 4. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 5. FIRST WE WILL TAKE UP GROUND NO.1 RAISED BY THE REVENUE AGAINST CIT(A)S DELETION OF ADDITION OF RS.14,84,770/-, MA DE BY ASSESSING OFFICER ON ACCOUNT OF GP ADDITION. THE LD. DR SUBMI TTED THAT ASSESSEE IS HAVING TURNOVER OF RS.1,88,02,279/- DUR ING THE YEAR UNDER APPEAL I.E. ASST. YEAR 2007-08 AND ACCORDINGL Y BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS WERE AUDITED U/S 44AB OF THE ACT. DURING THE YEAR UNDER CONSIDERATION GP MARGIN HAS B EEN REDUCED FROM 15.5% IN ASST. YEAR 2006-07 TO 10.10% IN ASST. YEAR 2007-08. ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 4 6. THE LD. DR FURTHER SUBMITTED THAT IN THE TAX AUD IT REPORT FURNISHED BY THE ASSESSEE, AUDITOR HAS MENTIONED IN COLUMN NO.28(A) OF FORM 3CD OF THE TAX AUDIT REPORT THAT STOCK REC ORDS HAS NOT BEEN PROVIDED FOR VERIFICATION HENCE WE ARE UNABLE TO RE PORT. QUANTITATIVE STOCK RECORDS WERE NEITHER MADE AVAILABLE BEFORE THE AUDITOR NOR BEFORE THE ASSESSING OFFICER EVEN AFTER VARIOUS OPP ORTUNITIES WERE GIVEN TO THE ASSESSEE. FINALLY WHEN SHOW CAUSE NOTI CE FOR REJECTING BOOKS OF ACCOUNTS WAS ISSUED TO ASSESSEE ON 28.12.2 009, ASSESSEE SUBMITTED THE DETAILS ON 29.12.2009 ALONG WITH THE CERTIFICATE OF AUDITOR, SUMITR SURANA & COMPANY DATED 29.12.2009 C ERTIFYING TO HAVE EXAMINED THE DETAILED STOCK REGISTER OF M/S VA NDAN SHREE FASIONS (PROPRIETORSHIP CONCERN OF THE ASSESSEE) FO R THE FINANCIAL YEAR ENDING ON 31.3.2007. 7. THE LD. DR ALSO SUBMITTED THAT AS THE GP RATE SH OWN BY THE ASSESSEE HAS DRASTICALLY DECREASED FROM 15.15% TO 1 0.10% IT WAS NECESSARY FOR THE ASSESSING OFFICER TO HAVE EXAMINE D THE PURCHASE AND SALE BILLS WITH THE QUANTITATIVE STOCK RECORDS AND THE SAME COULD NOT BE DONE BY THE ASSESSING OFFICER AS HE HAD NO T IME LEFT TO EXAMINE AND VERIFY THE STOCK RECORDS AND THEREFORE, IN THE ABSENCE OF POSSIBILITY OF DOING THIS VERIFICATION OF STOCK REC ORDS WITH THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAD NO OTHER OPTION EXCEPT TO INVOKE THE PROVISIONS OF SECTION 145 OF THE ACT AND ESTIMA TE THE GP RATE. THE LD. DR ALSO RELIED ON THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF S. N. NAMASIVAYAM CHETTIAR VS. CIT (1960) 3 8 ITR 579 (SC). ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 5 8. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HA S SUBMITTED A DETAILED PAPER BOOK RUNNING FROM PAGES 1 TO 52 WHER EIN ALONG WITH THE SUBMISSIONS MADE BEFORE THE CIT(A), DETAILED ST OCK REGISTER, AUDITORS CERTIFICATE, REGISTER FOR JOB WORK, MILL P ROCESS AND GREY SENT TO MILL, BILLS OF GOODS SOLD AND LEDGER ACCOUNT OF VAR IOUS EXPENSES. THE LD. AR RELYING ON THE ORDER OF CIT(A) SUBMITTED THA T ASSESSEE HAS SUBMITTED COMPLETE DETAILS, BOOKS OF ACCOUNTS AND S TOCK RECORDS, DULY EXPLAINED THE ISSUES RELATING TO DEFECTS AND SACKENED ITEMS, REASONS FOR INCREASE IN THE COST OF PRODUCTION AND CLOSING STOCK VALUATION. 9. THE LD. AR SUBMITTED THAT REJECTION OF BOOKS OF ACCOUNTS MADE BY THE ASSESSING OFFICER IS NOT PROPER, AS REJECTIO N HAS BEEN DONE WITHOUT ANY SPECIFIC DEFECT BEING POINTED OUT IN TH E BOOKS OF ACCOUNTS. THE LD. AR ALSO ACCEPTED THAT THERE WAS S OME DELAY IN FURNISHING THE STOCK RECORDS DUE TO SOME COMPUTER D EFECT. HOWEVER, ALL OTHER RELEVANT INFORMATION WERE IN THE POSSESSI ON OF THE ASSESSING OFFICER AND, THEREFORE, HE WAS NOT JUSTIFIED IN REJ ECTING THE BOOKS OF ACCOUNTS. THE LD. AR IN SUPPORT OF HIS SUBMISSION A LSO RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. SURESH SCRAP INDUSTRIES LTD. IN TAX APPEAL NO.1878 OF 2008 DATED 2.3.2010 WHEREIN IT HAS BEEN HELD THAT THE ASSESSIN G OFFICER WAS NOT CORRECT IN INVOKING THE PROVISIONS OF SECTION 145 O F THE ACT AS NO SPECIFIC REASONS HAVE BEEN PROVIDED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. FROM GOING THROUGH THE ASSESSMENT ORDER IT IS REVEALED ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 6 THAT THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THAT GP RATE OF THE ASSESSEE HAS DRASTICALLY REDUCED FROM 15.15% IN ASST. YEAR 2006-07 (ON A TURNOVER OF RS.15,42,878/-) TO GP @ 1 0.10% IN ASST. YEAR 2007-08 (ON A TOTAL TURNOVER OF RS.1,88,02,279 /-) AND THE TAX AUDITOR OF THE ASSESSEE HAS SPECIFICALLY MENTIONED IN FORM NO.3CD ATTACHED TO TAX AUDIT REPORT U/S 44AB THAT STOCK RE CORDS WERE NOT PROVIDED FOR VERIFICATION TO THE AUDITORS AND THERE FORE, AUDITORS WERE UNABLE TO REPORT ON THE QUANTITATIVE DETAILS OF RAW MATERIAL AND FINISHED GOODS. DUE TO THESE TWO REASONS IT WAS NEC ESSARY FOR THE ASSESSING OFFICER TO HAVE EXAMINED THE PURCHASE AND SALE BILLS OF THE ASSESSEE WITH THE QUANTITATIVE DETAILS AND VARIOUS OPPORTUNITIES WERE GIVEN TO THE ASSESSEE BUT THE QUANTITATIVE INFORMAT ION WERE FURNISHED ONLY ON A DAY BEFORE THE LAST DATE ON WHICH THE ASS ESSING OFFICER HAS TO FRAME ASSESSMENT ORDER AS PER STATUTORY OBLIGATI ONS. THE ASSESSING OFFICER IN RELATION TO NON-FURNISHING OF STOCK RECORDS BY THE ASSESSEE HAS OBSERVED AS FOLLOWS:- 3.1 QUANTITY DETAILS FURNISHED IS NOT STOCK REGIST ER : ASSESSEES EXPLANATION THAT REASON FOR NOT FURNISH ING THE QUANTITY DETAILS IS TECHNICAL SOFTWARE PROBLEM. THI S CANNOT BE ACCEPTED BECAUSE IT IS NOT POSSIBLE THAT FROM THE D ATE OF AUDIT PERIOD TILL DATE OF RETURN FILING BECAUSE OF SMALL TECHNIC AL PROBLEM QUANTITY DETAILS CANNOT PRINTED. ACTUALLY ASSESSEE HAS NOT M AINTAINED THE RECORDS ANYTIME DURING THE YEAR. HE EVEN DELIBERATE LY CARRIED THE ASSESSMENT PROCEEDINGS TO THE FAG END OF THE YEAR O NLY TO AVOID THE INVESTIGATION. EARLIER, IT WAS STATED THAT PRINTOUT OF QUANTITY DETAILS MAINTAINED IN COMPUTER IS VOLUMINOUS SO GETTING PRI NTOUT AND PRODUCING THE SAME FOR VERIFICATION IS TEDIOUS JOB. AR OF ASSESSEE REQUESTED THAT HE WILL FURNISH THE BACKUP OF QUANTI TY DATAS MAINTAINED IN CD. THAT TOO FURNISHED ON 24.12.2009 WITH SUBMIS SION LETTER, BUT SUPPLIED CD DID NOT WORK. AT LAST ON 28.12.2009 AWA ITED PRINTOUT OF ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 7 QUANTITY DATAS WERE FURNISHED. BUT SURPRISING PRODU CED QUANTITY RECORDS ARE NOT BILL TO BILL MAINTENANCE OF PURCHAS E OF GREY, ISSUE TO MILL, RECEIVED FROM MILL, ISSUE FOR JOB WORK ETC. I T WAS A STOCK SUMMARY OF 5 PAGE PREPARED FROM SALE/PURCHASE/EMBROIDERY BI LLS. IF THE STOCK REGISTER MAINTAINED IN COMPUTER IS OF ONLY 5 PAGES WHY IT WAS NOT FURNISHED EARLIER CANNOT BE UNDERSTOOD. IN ANY WAY SO CALLED 5 PAGE STATEMENT FURNISHED BY ASSESSEE CAN NOT BE TREATED AS STOCK REGISTER. NO REGISTER WAS MAINTAINED FOR GREY CLOTHS RECEIVED . NO REGISTER WAS MAINTAINED FOR GREY ISSUED TO MILL, RECEIVED FROM M ILL, ISSUE FOR JOB WORK ETC. WHATEVER ASSESSEE FURNISHED SO CALLED QUA NTITY PAPERS ARE PREPARED RECENTLY. THOSE 5 PAGES ARE NOTHING BUT DA TE WISE SUMMARY OF BILLS PREPARED RECENTLY AND NOT AT THE TIME OF B USINESS DURING THE YEAR. HAND WRITTEN COPY FURNISHED WAS ONLY A CALCUL ATION IN SUPPORT OF FIGURES SHOWN IN TRADING ACCOUNT. 11. FURTHER IT IS SURPRISING TO SEE THAT THE TAX AU DITOR ON ONE HAND HAS MENTIONED IN THE REPORT THAT STOCK RECORDS HAS NOT BEEN PROVIDED FOR THEIR VERIFICATION BEFORE THE DUE DATE OF COMPL ETION OF AUDIT AND ON THE OTHER HAND JUST BEFORE TWO DAYS OF THE LAST DAT E OF ASSESSMENT COMPLETION DATE, HE HAS ISSUED A CERTIFICATE ON 29. 12.2009 THAT DETAILED STOCK RECORDS HAVE BEEN EXAMINED AND THE S AME IS IN AGREEMENT WITH THE BOOKS OF ACCOUNT MAINTAINED BY M /S VANDAN SHREE FASHIONS (PROPRIETOR, SHRI MAYANK K. JAIN). T HIS MEANS THAT AS THE AUDITOR HIMSELF HAS CERTIFIED ON 29.12.2009 OF VERIFYING DETAILED STOCK REGISTERS FOR THE FINANCIAL YEAR 2006-07, IT WAS ALMOST IMPOSSIBLE FOR THE ASSESSING OFFICER TO PROPERLY EX AMINED THE STOCK RECORDS OF THE ASSESSEE IN JUST ONE DAY BECAUSE THE ASSESSING OFFICER HAS TO FRAME THE ASSESSMENT ORDER FOR ASST. YEAR 2007-08 LATEST BY 31 ST DECEMBER, 2009. ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 8 12. FURTHER HONBLE SUPREME COURT IN THE CASE OF S. N. NAMASIVAYAM CHETTIAR VS. CIT (SUPRA) HAS DECIDED TH E ISSUE WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER IS JUST IFIED TO ESTIMATE THE PROFITS OF THE ASSESSEE WHERE THERE IS ABSENCE OF S TOCK REGISTER. THE OBSERVATIONS OF THE HONBLE APEX COURT ARE AS FOLLO WS :- THE WANT OF A STOCK REGISTER WAS, IN THAT PARTICUL AR CASE, NOT A VERY SERIOUS DEFECT BECAUSE THE ACCOUNT BOOKS HAD BEEN F OUND AND ACCEPTED AS CORRECT AND DISCLOSED A TRUE STATE OF A FFAIRS. IT CANNOT, THEREFORE, BE SAID THAT THAT CASE LAID DOWN AS A PR OPOSITION OF LAW THAT THE WANT OF A STOCK REGISTER BY WHICH A PROPER CHEC K COULD BE MADE WAS NOT SUCH A SERIOUS DEFECT AS TO MAKE THE PROVIS O TO SECTION 13 IN- APPLICABLE. THE IMPORTANCE OF SUCH A REGISTER WAS POINTED OUT B Y THE NAGPUR HIGH COURT IN GHANSHYAMDAS PERMANAND VS. CIT [1952] 21 ITR 79. IN CASES SUCH AS THE INSTANT CASE, THE KEEPING OF A STOCK REGISTER IS OF GREAT IMPORTANCE BECAUSE THAT IS A MEANS OF VERIFYI NG THE ASSESSEES ACCOUNTS BY HAVING A QUANTITATIVE TALLY. IF, AFTE R TAKING INTO ACCOUNT ALL THE MATERIALS INCLUDING THE WANT OF A STOCK REG ISTER, IT IS FOUND THAT FROM THE METHOD OF ACCOUNTING THE CORRECT PROFITS O F THE BUSINESS ARE NOT DEDUCTIBLE, THE OPERATION OF THE PROVISO TO SEC TION 13 OF THE INCOME-TAX ACT WOULD BE ATTRACTED. BOMBAY CYCLE STO RES CO. LTD. VS. CIT (1958) 33 ITR 13. IT MAY ALSO BE ADDED, AS WAS HELD BY THAT COURT IN CIT VS. MCMILLAN & CO. (19958) 33 ITR 182, THAT THE INCOME TAX OFFICER, EVEN IF HE ACCEPTS THE ASSESSEES METH OD OF ACCOUNTING, IS NOT BOUND BY THE FIGURE OF PROFITS SHOWN IN THE ACCOUNTS. IT IS FOR THE INCOME-TAX AUTHORITIES TO CONSIDER THE MATERIAL WHI CH IS PLACED BEFORE THEM AND, IF, AFTER TAKING INTO ACCOUNT IN ANY CASE THE ABSENCE OF A STOCK REGISTER COUPLED WITH OTHER MATERIALS THEY AR E OF THE OPINION THAT CORRECT PROFITS AND GAINS CANNOT BE DEDUCED, THEN T HEY WOULD BE JUSTIFIED IN APPLYING THE PROVISO TO SECTION 13. IN OUR OPINION, THEREFORE, WHEN THE TRIBUNAL APPLIED THE PROVISO TO SECTION 13 BECAUSE OF THE VARIOUS BLEMISHES WHICH WERE POINTED OUT BY THE INCOME-TAX OFFICER AND ACCEPTED BY THE APPELLATE TR IBUNAL, IT CANNOT BE SAID THAT THERE WAS ANY ERROR IN THE ORDER OF TH E APPELLATE TRIBUNAL JUSTIFYING THE INTERFERENCE OF THIS COURT UNDER ART ICLE 136. ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 9 13. APPLYING THE ABOVE RATIO OF THE HONBLE SUPREME COURT TO THE FACTS OF THE CASE OF ASSESSEE IT IS ON RECORD AND E VEN NOT CONTROVERTED BY THE LD. AR THAT THE QUANTITATIVE ST OCK RECORDS I.E. DETAILED STOCK REGISTER ALONG WITH CERTIFICATE OF C HARTERED ACCOUNTANT WAS MADE AVAILABLE TO THE ASSESSING OFFICER FOR VER IFICATION FOR THE FIRST TIME ON 30 TH DECEMBER, 2009 AND EVEN IF PART OF THE DETAILS WER E ALREADY SUBMITTED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS BUT THE CRUCIAL AND IMPORTANT DETAILS I.E. QUANTITATIVE DETAILS WHICH WERE VERY NECESSARY FOR EXAMINING THE BOOKS OF ACCOUNTS OF THE ASSESSEE, VERIFICATION OF GP AND NET PROFIT SHOWN BY THE ASSE SSEE AND ALSO TO JUSTIFY THE CLAIM OF ASSESSEE OF INCREASED COST AND REDUCED GP RATE, WERE SUBMITTED A DAY BEFORE THE LAST DATE OF COMPLE TION OF ASSESSMENT PROCEEDINGS AS REQUIRED UNDER THE PROVIS IONS OF THE ACT, WHICH IN THE PRESENT CASE WAS 31 ST DECEMBER, 2009 AND THE DETAILED QUANTITATIVE DETAILS ALONG WITH AUDITORS CERTIFICAT E DATED 29.12.2009 WERE SUBMITTED ON 30.12.2009. ALL THESE DETAILS WE RE MADE AVAILABLE BEFORE THE LD. CIT(A) BUT THERE WAS NO OCCASION AVA ILABLE FOR THE ASSESSING OFFICER TO EXAMINE THESE ASPECTS AND DUE TO THIS THE ASSESSING OFFICER HAD TO PROCEED TO INVOKE THE PROV ISIONS OF SECTION 145. IN THIS CASE WHERE ON THE PART OF ASSESSEE MOS T OF THE DETAILS AND QUANTITATIVE RECORDS ARE FURNISHED BEFORE CIT(A ) AND BEFORE THE TRIBUNAL, BUT THESE DETAILS COULD NOT BE EXAMINED O N MERIT BY THE ASSESSING OFFICER DUE TO LACK OF TIME WHICH AROSE D UE TO SUBMISSION OF NECESSARY AND CRUCIAL DETAILS IN THE LAST HOUR O F ASSESSMENT PROCEEDINGS AND, THEREFORE, IT WILL BE JUST AND PRO PER IN THE INTEREST OF NATURAL JUSTICE TO REMIT BACK THE ISSUE TO THE FILE OF AO WITH THE ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 10 DIRECTIONS TO RE-EXAMINE THE BOOKS OF ACCOUNT, ON T HE REASONS FOR INCREASED COST AND REDUCTION IN GP RATE IN THE LIGH T OF DETAILED STOCK REGISTER AND QUANTITATIVE DETAILS OF OPENING STOCK, PURCHASE OF RAW MATERIAL, GOODS MANUFACTURED, YIELD, CLOSING STOCK OF RAW MATERIAL AND FINISHED GOODS AND GOODS SOLD DURING THE YEAR A ND ACCORDINGLY FRAME ASSESSMENT AFRESH. IN VIEW OF ABOVE DISCUSSIO N, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 14. GROUND NO.2 IS AGAINST DELETION OF ADDITION OF RS.59,161/- ON ACCOUNT OF UNEXPLAINED EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CAME ACROSS FOLLO WING EXPENSES SHOWN IN THE PROFIT AND LOSS ACCOUNT WHERE PAYMENTS WERE INCURRED IN CASH :- I) AGENT COMMISSION RS.46,088/-(OUT OF RS.1,52,113 ) II) CUTTING & FOLDING RS.60,000/- III) MAINTENANCE RS.17,100/- IV) PACKING MATERIALS RS.27,455/- (OUT OF RS.1,28, 705/) V) SALARY EXPENSES RS.1,86,000/- RS.3,36,643/- THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE SUPPORTING EVIDENCES BUT THE SAME WERE NOT PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT EVEN THEN THE ASSESSING OFFICER TOOK A LENIENT VIEW THAT EVEN IF THE SUPPORTING BILLS AND VOUCHERS HAVE NOT BEEN PRODUCED IT DOES NOT MEAN THAT EXPENSES WERE N OT INCURRED. FINALLY, ON RECEIVING THE SHOW CAUSE NOTICE, ASSESS EE PRODUCED THE VOUCHERS WITHOUT HAVING ANY REVENUE STAMP, JUST A D AY BEFORE THE ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 11 LAST DATE DUE FOR COMPLETION OF ASSESSMENT AND AS O BSERVED BY THE ASSESSING OFFICER THAT VOUCHERS WERE LOOKING FRESH AND NOT THREE YEARS OLD, TOOK A VIEW THAT THE VOUCHERS HAVE BEEN PREPARED AFTER RECEIVING SHOW CAUSE LETTER AND ACCORDINGLY DISALLO WED 25% OF RS.3,36,643/- I.E. RS.84,161/-. 15. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE THE C IT(A) WHO SCALED DOWN THE DISALLOWANCE FROM RS.84,161 TO A LU MP SUM FIGURE OF RS.25,000/-. 16. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 17. THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFF ICER WHEREAS THE LD. AR RELIED ON THE ORDER OF CIT(A). 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ON DUE CONSIDERATION OF THE MATERIAL, WE AGREE WITH THE VIEW TAKEN BY LD. CIT(A) WHEREIN HE HAS OBSERVED AS BELOW :- 4.1 I HAVE GONE THROUGH THE FACTS OF THE CASE. I D O NOT AGREE WITH THE VIEW OF THE A.O. THAT THE VOUCHERS HAVE BEEN PR EPARED AS AN AFTERTHOUGHT AS THESE EXPENSES WOULD HAVE BEEN RECO RDED IN THE BOOKS WHICH HAD ALREADY BEEN PRODUCED BEFORE THE AO . IN ANY CASE THE TIME ALLOWED FOR PRODUCTION OF VOUCHERS AFTER I SSUE OF LETTER ON 28.12.2009 WAS VERY SHORT AND PREPARING VOUCHERS WO ULD NOT BE POSSIBLE. HOWEVER, HAVING SAID THAT, IT IS ALSO A F ACT THAT EXPENSES HAD BEEN INCURRED IN CASH AND THIS MAKES THE EXPENS E UNVERIFIABLE NOT TO MENTION POSSIBILITY OF INFLATION OF EXPENSES . IT IS ALSO A FACT THAT CERTAIN EXPENSES IN THE NAME OF SALARY, ALTHOUGH IN CURRED IN CASH, WERE OPEN TO VERIFIABLE. IN MY OPINION, RESTRICTING THE DISALLOWANCE TO RS.25,000/- WOULD MEET THE ENDS OF JUSTICE. DISALLO WANCE IS RETAINED TO THIS EXTENT. THIS GROUND IS PARTLY ALLOWED. ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 12 IN VIEW OF OUR ABOVE DISCUSSION, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF LD. CIT(A) AND UPHOL D THE SAME. THIS GROUND OF REVENUE IS DISMISSED. 19. GROUND NOS. 3 & 4 ARE OF GENERAL NATURE WHICH, DO NOT REQUIRE ANY ADJUDICATION. 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2015 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 20/11/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NO. 427/AHD/2012 ASST. YEAR 2007-08 13 1. DATE OF DICTATION: 5/11/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 6/11/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 20/11/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: