The DCIT, Central Circle-2(2), Ahmedabad V. Ram Minechem Associates, Ahmedabad

ITA 4309/AHD/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6803 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 05-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Rejection of books of accounts; Business income; Depreciation
• Section: 145; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.4309/AHD/2007 A. Y.: 2003-04 THE D. C. I. T., CENTRAL CIRCLE 2(2), AHMEDABAD, ROOM NO.309, 3 RD FLOOR, AAYAKAR BHAVAN, ASHRAM ROAD, AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD., OPP. SANTOSH CHEMICALS, MALGODOWN, MEHSANA PA NO. AAECS 7725 B (APPELLANT) (RESPONDENT) APPELLANT BY SMT. NEETA SHAH, SR. DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II I, AHMEDABAD DATED 18-09-2007 FOR ASSESSMENT YEAR 2003-04 CHALLE NGING THE ORDER OF THE LEARNED CIT(A) IN DELETING ADDITION OF RS.10 ,08,700/- MADE BY THE AO ON ACCOUNT OF GROSS PROFIT AFTER REJECTING THE BOOKS OF ACCOUNTS. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. HOWEVER, NONE APPEARED ON BEHAL F OF THE ASSESSEE DESPITE SERVICE OF THE NOTICE. THE ASSESSE E IS, THEREFORE, PROCEEDED EX-PARTE. ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 2 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN MANUFACTURING OF SILICATE PRODUCED FROM SODA ASH . IT HAD DISCLOSED THE GROSS PROFIT AT 17.2% AS AGAINST 16.3% IN THE E ARLIER YEAR, AS PER THE WORKING APPENDED IN ANNEXURE-VII CLAUSE 32 IN F ORM NO.3CD, FILED WITH THE AUDITED ACCOUNTS. THE AO FELT THAT T HE GROSS PROFIT DISCLOSED IS CONTRIVED BY INCLUDING THE SALE OF SOD A ASH ALSO AND THEREFORE, SOUGHT DETAILS OF CONSUMPTION OF RAW MAT ERIAL AND DETAILS OF PRODUCTION. THE AO OBSERVED THAT THE DETAILS FURNI SHED BEFORE HIM VIDE LETTER DATED 17-1-2006/ 18-1-2006 DID NOT ENAB LE THE QUANTIFICATION OF THE CONSUMPTION OF RAW MATERIAL V IS--VIS, THE PRODUCTION OF DIFFERENT GRADES OF SILICATE LIQUID. THE AO FURTHER NOTED THAT OUT OF THE TOTAL PURCHASES OF SODA ASH I.E. 46 7.125 MT AT AVERAGE PRICE OF RS.9,246/- PER MT, SODA ASH OF 254 .275 MT HAS BEEN SHOWN SOLD TO M/S. GOPAL FABRICS AT AVERAGE PR ICE OF RS.14,926/- PER MT. THE AO OBSERVED THAT THE ASSESS EE HAD ITSELF PURCHASED SODA ASH ON A WEIGHT BASIS I.E. IN FORM O F 75 KG. BAGS FROM M/S. SAURASHTRA CHEMICALS AND 50 KG. BAGS FROM M/S. K. K. ENTERPRISES, WHEREAS IT HAD MADE THE SALES TO M/S. GOPAL FABRICS IN TERMS OF BAGS SOLD. THE AO, ON INQUIRIES FROM M/S. GOPAL FABRICS AND AFTER RECORDING THE STATEMENT OF ITS PARTNERS SHRI VIKASH SHAH, NOTED THAT 4130 BAGS WEIGHING 75 KG. EACH HAD BEEN SOLD T O M/S. GOPAL FABRICS I.E. AMOUNTING TO 309.75 MT WHICH WAS 55.47 MT MORE THAN THE SALES SHOWN AT 254.275 MT BY THE ASSESSEE TO M/ S. GOPAL FABRICS. THE AO CONCLUDED THAT THIS REVEALED EITHER THE UNACCOUNTED PURCHASES OF THE ASSESSEE OF 55.47 MT OR THAT THE C ONSUMPTION FIGURES GIVEN BY THE ASSESSEE WERE NOT CORRECT AND SOUGHT CLARIFICATION VIDE SHOW CAUSE NOTICE DATED 1-3-2006 . IN RESPONSE TO ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 3 THE SAME, IT WAS SUBMITTED BEFORE HIM THAT THE TOTA L TURNOVER OF RS.1,01,25,860/- COMPRISED OF THE TURNOVER FROM MAN UFACTURING, TRADING AND JOB WORK RECEIPTS. THE SALE AND PURCHAS E REGISTERS WERE MAINTAINED ALONG WITH VOUCHERS. IT WAS INADVERTENTL Y SHOWN THAT THE SALE TO M/S. GOPAL FABRICS WAS 254.275 MT INSTEAD O F ACTUAL WEIGHT SOLD OF 309.75 MT BUT THE VALUE OF THE SALE I.E. RS .37.96 LACS WAS CORRECT AND WAS CONFIRMED BY M/S. GOPAL FABRICS ALS O. THUS, THE SODA ASH USED FOR MANUFACTURING WAS 176.125 MT. IN OTHER WORDS, ONLY QUANTITY OF THE RAW MATERIALS SHOWN SOLD TO M/ S. GOPAL FABRICS WAS GIVEN INADVERTENTLY AT A LESSER FIGURE, THOUGH IT DID NOT AFFECT THE TRADING RESULTS SHOWN AS THE COST OF THE RAW MATERI AL SOLD, THE VALUE REALIZED FROM M/S. GOPAL FABRICS REMAINS UNCHANGED. THUS, THE ONLY CHANGE RESULTED IN THE COST OF GOODS SOLD TO BE AT RS.28,01,267/- INSTEAD OF RS.16,93,354/- AS SHOWN EARLIER. IT WAS SUBMITTED THAT THIS FIGURE OF CONSUMPTION I.E. 176.125 MT, SUBSEQUENT T O THE ADJUSTMENT OF THE INADVERTENTLY SHOWN WEIGHT OF THE SOLD GOODS WAS IN LINE AND CONSISTENT WITH THE CONSUMPTION FIGURES IN THE EARL IER YEAR ALSO. THIS COULD BE SEEN FROM THE FACT THAT IN A. Y. 2002-03 T HE SILICATE PRODUCED WAS 2035.4 MT, FROM 520.25 MT OF SODA ASH I.E. AT CONSUMPTION RATIO OF 25.5%. IN ASSESSMENT YEAR 2003 -04, THE SILICATE PRODUCED WAS 642.68 MT, FROM 176 MT OF SODA ASH I.E . AT THE RATE OF CONSUMPTION RATIO OF 27.4%. THUS IT WAS APPARENT TH AT THE WEIGHT/QUANTITY OF THE SODA ASH SOLD AS RAW MATERIA L HAD BEEN GIVEN INCORRECTLY BY INADVERTENCE AT 254.2 MT INSTEAD OF THE ACTUAL WEIGHT OF 309.75MT. IT WAS EXPLAINED THAT THE DISCREPANCY HAD BEEN CREPT IN BECAUSE OF THE MISTAKE OF THE ACCOUNTANT IN TAKING THE WEIGHT OF TH4E BAGS OF SODA ASH SOLD AT 50 KG INSTEAD OF CORRECT W EIGHT OF 75 KG. ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 4 HOWEVER, SINCE THERE WAS NO CHANGE IN THE VALUE OF THE SALE PRICE ETC., NO MODIFICATION WAS REQUIRED. THE FACT THAT T HE CONSUMPTION WAS OF 176.125 MT ONLY AND NOT OF 255.275 MT IS PROVED BY THE FACT THAT IF 231.6 MT HAD BEEN CONSUMED, THEN THE CONSUMPTION RA TIO WOULD HAVE BEEN 36% WHICH WOULD HAVE BEEN ABNORMAL IN COM PARISON TO THE CONSUMPTION RATIO IN THE EARLIER YEAR. BEFORE THE AO, THE ASSESSEE ALSO SUBMITTED A COMPARISON OF THE GROSS P ROFIT FOR TRADING ACTIVITY AND MANUFACTURING ACTIVITY FOR THE CURRENT YEAR AS WELL AS IN THE EARLIER YEAR TO POINT OUT THAT GROSS PROFIT IN MANUFACTURING AT 11.12% IN THE CURRENT YEAR WAS LESS BY 0.23% AND TH E GROSS PROFIT IN TRADING ACTIVITY I.E. 26.2% WAS LESS BY 3.82% FROM THE EARLIER YEAR. THE REASON FOR THIS MARGINAL DECLINE WAS ATTRIBUTED TO THE FACT THAT THE SALE PRICE HAD BEEN REDUCED BY ABOUT 8.5% IN THE CU RRENT YEAR WHILE THE COST PRICE HAD BEEN REDUCED BY 3.5% ONLY AND TH E DIFFERENCE HAD AFFECTED THE GROSS PROFIT BY 3.2% IN THE CURRENT YE AR. THE AO HOWEVER, FELT THAT THE CONTENTIONS OF THE ASSESSEE WERE NOT SUPPORTED BY COGENT EVIDENCE. THE AO NOTED THAT REGISTERS/REC ORDS RELATED TO CONSUMPTION, PRODUCTION AND ISSUE WERE NOT PRODUCED . EVEN IN THE REVISED WORKING OF THE GROSS PROFIT, THE ASSESSEE H AD NOT CONSIDERED THE COST OF FUEL CONSUMED. IN PARA 7 OF HIS ORDER, THE AO NOTED THAT EVEN IF THE REVISED WORKING OF GROSS PROFIT WAS ACC EPTED, THE SALES OF SODA ASH SHOWN AT RS.16.93 LAKHS, BUT THE COST WAS RS.28.01 LAKHS AND SO WOULD HAVE RESULTED INTO A NET LOSS INSTEAD OF THE PROFITS SHOWN BY THE ASSESSEE. IN THE OPINION OF THE AO, T HE GROSS PROFIT IN RESPECT OF MANUFACTURING WAS 1.97% ONLY WHEREAS IT WAS 18.4% IN THE EARLIER YEAR AND THERE WAS NO REASON/EVIDENCE F OR THIS DECLINE. THE AO, THEREFORE, INVOKED THE PROVISIONS OF SECTIO N 145 OF THE IT ACT ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 5 AND ADOPTED THE PROFIT @ 15% AND COMPUTED THE GROSS PROFIT AT RS.9,49 LAKHS ON THE TOTAL SALES OF RS.28.62 LAKHS AND RS.34.64 LAKHS FOR JOB WORK I.E. TOTAL OF RS.63.27 LAKHS. T HEREBY, THE AO WORKED OUT THE NET PROFIT AT RS.10.61 LAKHS INSTEAD OF 1.73 LAKHS DISCLOSED BY THE ASSESSEE. THE AO NOTED THAT THE AS SESSEE HAD INTENTIONALLY FURNISHED INCORRECT INFORMATION IN IT S BOOKS OF ACCOUNT/AUDITED ACCOUNTS AND HAD ACTUALLY SOLD SODA ASH OF 309 MT AND NOT 254.2 MT AS SHOWN IN THE DETAILS. THE AO CO MPUTED THE DIFFERENCE OF 55.4 MT WAS OUT OF UNACCOUNTED PURCHA SES WHICH COME TO RS.5.12 LAKHS @ RS.9,246/- PER MT. THE AO HOWEVE R, DID NOT MAKE SEPARATE ADDITION, CONSIDERING IT TO BE COVERE D BY THE GROSS PROFIT ADDITION MADE. THE AO FURTHER OBSERVED THAT ADDITIONS TO PLANT AND MACHINERY HAD BEEN MADE TO THE EXTENT OF RS.1,2 1,557/- BUT THERE WAS NO EVIDENCE OF TRANSPORT RECEIPTS TO ESTA BLISH THAT THE FABRICATED PLANT AND MACHINERY HAD BEEN BROUGHT TO THE ASSESSEES SITE FROM BHAVNAGAR WHERE THE FABRICATOR WAS LOCATE D. AS SUCH, THE AO FELT THAT THE ADDITION TO PLANT AND MACHINERY WA S NOT PROVED AND THE CLAIM OF DEPRECIATION THEREON WAS NOT ALLOWABLE AND ACCORDINGLY DISALLOWED THE AMOUNT OF RS.30,996/-. 4. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE GROSS PROFIT WAS AS UNDER: A. Y. GP OF TRADING GP OF MANUFACTURING ACTIVITY ACTIVITY 2002-03 30.02% 11.35% 2003-04 26.20% 11.12% ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 6 AND THAT IT WAS A FACT THAT THE WEIGHT OF THE RAW M ATERIAL SODA ASH SOLD TO M/S. GOPAL FABRICS WAS 309.75 MT AND WAS NO T 254 MT AS HAD BEEN INADVERTENTLY SHOWN. THIS FACT WAS CONFIRM ED BY THE AO HIMSELF FROM EXAMINATION/STATEMENT OF THE RECORDS O F M/S. GOPAL FABRICS. THIS MISTAKE IN QUANTUM OF WEIGHT WAS ON A CCOUNT OF THE FACT THAT THE BAGS WEIGHING 75 KG WERE INADVERTENTLY CON SIDERED AS BAGS WEIGHING 50 KG. HOWEVER, THERE WAS NO CHANGE IN THE VALUE OF THE SALES, BUT THE VALUE OF THE RAW MATERIAL SOLD HAD C HANGED CONSEQUENTLY. THE INPUT OUTPUT RATIO FOR THE CURRE NT YEAR WAS CONSISTENT WITH THE RATIOS OF THE EARLIER YEAR, ONC E THE REVISED WEIGHT OF GOODS CONSUMED WAS CONSIDERED. THE ENTIRE POSITI ON WAS EXPLAINED VIDE REPLY TO THE AO DATED 3-3-2006 AND 1 4-3-2006. IT WAS POINTED OUT THAT DESPITE THIS CHANGE IN WEIGHT I.E. RAW MATERIAL CONSUMPTION, THERE WAS NO AFFECT ON THE INCOME, AS THE SALE VALUE OF THE GOODS SOLD AND THEIR COST PRICE REMAINED THE SA ME. IN THE REPLY DATED 14-3-3006 IT WAS EXPLAINED THAT FUEL EXPENSES HAD ALREADY BEEN INCORPORATED WHILE COMPUTING THE GROSS PROFIT IN THE MANNER SIMILAR TO ASSESSMENT YEAR 2002-03. THE VALUE OF TH E OPENING STOCK OF RAW MATERIAL, TOTAL PURCHASES OF RAW MATERIAL DU RING THE YEAR AND THE VALUE OF THE CLOSING STOCK OF RAW MATERIAL REMA INED THE SAME EVEN THOUGH THE QUANTUM OF THE SALE WAS NOW FOUND T O BE 309 MT AS AGAINST 254.2 MT AS STATED EARLIER. ALSO SINCE BULK PURCHASE OF THE RAW MATERIAL SODA ASH WAS COST EFFECTIVE, PART OF I T WAS SOLD TO M/S. GOPAL FABRICS AT A GOOD PROFIT MARGIN. MOREOVER, TH E QUANTUM OF THE CONSUMPTION I.E. 176 MT INSTEAD OF 231 MT WAS ALSO IN THE LINE WITH THE PROPORTION/CONSUMPTION PATTERN OF THE EARLIER Y EAR. IT WAS SUBMITTED THAT THE MISTAKES WERE APPARENT AND AN AP PLICATION U/S 154 ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 7 OF THE IT ACT HAD ALSO BEEN MOVED BEFORE THE AO ON 3-4-2006. BUT THIS APPLICATION U/S 154 OF THE IT ACT WAS REJECTED ON 21-3-2007 ON THE GROUND THAT THERE WARE DEBATABLE ISSUES INVOLVE D. IN SHORT, IT WAS SUBMITTED THAT JUST BECAUSE THE WEIGHT OF THE RAW M ATERIALS SOLD WAS FOUND TO HAVE BEEN UNDERSTATED BY ABOUT 55 MT, IT D ID NOT IMPLY THAT THE ACCOUNTS WERE DEFECTIVE AND/OR ADDITION WAS NOT WARRANTED, PARTICULARLY WHEN THERE WAS NO CHANGE IN TALL OTHER PARAMETERS E.G. THE VALUE OF THE SALES. 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AO AND MATERIAL ON RECORD DELETED THE ADDITION. HIS FINDINGS IN PARA 9 TO 11 ARE REPRODUCED AS UNDER: 9. THE CONTENTIONS WERE CAREFULLY CONSIDERED. IT I S SEEN THAT THE A. O. FROM HIS EXAMINATION OF SHRI VI KASH C. SHAH OF M/S. GOPAL FABRICS, HAD CORRECTLY DETERMINE D THAT THE WEIGHT OF THE RAW MATERIAL (SODA ASH) SOLD BY T HE APPELLANT WAS INCORRECTLY GIVEN IN THE AUDITED ACCO UNTS AT 254.2 M.T. EVENTHOUGH IT WAS 309.7 M.T. IN FACT. AS A COROLLARY, THE CONSUMPTION OF RAW MATERIAL SHOWN BY THE APPELLANT AT 236.1MT WAS ALSO INCORRECT AND WOULD H AVE BEEN 171 MT. ALSO THE COST OF GOODS SOLD (OF 309 M. T.) WOULD COME TO APPROXIMATELY RS.2.28 LAKHS AGAINST T HE COST OF RS.1.69 LAKHS SHOWN. TO THIS EXTENT, THE BO OKS OF ACCOUNTS/AUDITED RESULTS SUFFERED FROM DEFECTS AND THEIR REJECTION WAS JUSTIFIED. 10. HOWEVER, IT IS SEEN THAT THE TOTAL COST OF THE RAW MATERIAL AS PER SCHEDULE L OF THE PROFIT AND LOSS A CCOUNT AND THE SALE PRICE OF 37.96 LAKHS REMAIN UNCHANGED. THUS WHILE THE QUANTITY SOLD TO M/S. GOPAL FABRICS WAS MORE, THERE WAS NO DISCREPANCY IN RESPECT OF THE PR ICE PAID BY IT. THE A. O. HAS ALSO FOUND THE DISCREPANC Y OF ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 8 RS.5,000/- ONLY, ON EXAMINING THE ACCOUNTS OF M/S. GOPAL FABRICS AND THE APPELLANT, IN THIS REGARD. FURTHER IT IS SEEN THAT THE CONSUMPTION PATTERNS/INPUT-OUTPUT RATIO IN THE PREVIOUS YEAR WAS 25.5% I.E. CLOSE TO 27.4%. IF THE CONSUMPTION IN THE PREVIOUS YEAR WAS TO BE CONSIDER ED AT 231 M.T., AS PER THE FIGURES INITIALLY GIVEN BY THE APPELLANT AND AS APPEARING IN THE AUDITED ACCOUNTS, THE CONSUMPTION RATIO WOULD COME TO ABOUT 36%. ON THE OTHER HAND, WHEN THE CONSUMPTION IS CONSIDERED AT 1 76 M.T., THE CONSUMPTION RATIO COMES TO 27.4% WHICH IS IN LINE WITH THE RESULTS OF THE EARLIER YEAR. THERE IS NO EVIDENCE OF UNACCOUNTED PURCHASES AND IN THE FACTS AND CIRCUMSTANCES AND GOING BY THE RATIO OF THE CONSUMP TION ITS PATTERN, THE EXPLANATION OF THE APPELLANT THAT THE WEIGHT OF THE SOLD GOODS HAD BEEN GIVEN INCORRECTLY BY INADVERTENCE, IS ACCEPTABLE PARTICULARLY WHEN ALL T HE OTHER PARAMETERS SUCH AS THE VALUE OF THE SALE PRICE AND TOTAL COST OF THE TOTAL PURCHASES REMAIN UNCHANGED. THE APPELLANT HAD ALSO POINTED OUT IN ITS REPLY TO THE A. O. THAT THE ADOPTION OF THE REVISED FIGURES RESULTED INTO A MORE LOGICAL AND CORRECT EXPLANATION AND IN ANNEXURE-I O F HIS REPLY, TO THE A. O. DATED 3/3/2006 HAD ALSO BEEN PO INTED OUT THAT THE G.P. IN TRADING ACTIVITY WAS 26.2% AND 11.12% ION THE MANUFACTURING ACTIVITY IN LINE WITH G. P. RATIO OF THE EARLIER YEAR. IT IS PERTINENT TO NOTE THAT THE REVISED DETAILS HAD BEEN FURNISHED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS ITSELF, ONCE THE A. O. R AISED THIS QUERY IN THIS REGARD, VIDE HIS LETTER DATED 1/ 3/2006. THE APPELLANT HAD SUBMITTED ITS EXPLANATION AND RE- CONCILIATION THEREAFTER, VIDE REPLY DELIVERED ON 10 /3/2006 AND VIDE REPLY DATED 13/3/2006. IN THESE REPLIES TH E APPELLANT HAD CLARIFIED THAT THE OVER ALL COST OF G OODS SOLD AND GOODS CONSUMED FOR PRODUCTION HAD NOT CHANGED A S THE VALUE OF THE OPENING STOCK OF RAW MATERIAL, OF ITS TOTAL PURCHASES IN THE YEAR AND THE VALUE OF CLOSING STOC K OF RAW MATERIAL HAD REMAINED UNCHANGED EVEN THOUGH THE WEIGHT OF THE SALES MADE WAS REVISED TO 309 M.T. (INSTEAD OF 254 M.T.) AND OF CONSUMPTION AT 173 MT (INSTEAD OF 231MT). IT ONLY MEANT THAT THE WEIGHT O F THE SODA ASH SOLD INCREASED BY 55.7 MT WHILE THAT ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 9 CONSIDERED FOR CONSUMPTION, WAS REDUCED BY THE SAME QUANTUM OF 55.7 M.T. WITH THE CONSEQUENCE THAT THE CONSUMPTION PATTERN AND RATIO WAS RECONCILED IN COMPARISON OF THE EARLIER YEAR ALSO. CONSEQUENTLY, THE OVERALL G.P. IN THE PREVIOUS YEAR CAME TO 17.29% AS AGAINST THAT OF 16.33% IN THE EARLIER YEAR. 11. ON A HOLISTIC CONSIDERATION OF THE FACTS AND CIRCUMSTANCES AND THE DETAILS ON RECORD, IT IS HELD THAT TRADING ADDITION MADE BY THE A. O. WAS NOT JUSTIFIE D AND IS DELETED. 6. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE CONSUMPTION REGIS TER, PRODUCTION REGISTER AND ISSUE REGISTER BEFORE THE AO, THEREFOR E, BOOK RESULTS WERE NOT SUPPORTED BY EVIDENCES. THE GROSS PROFIT WORKING SHOWN BY THE ASSESSEE IN THE AUDITED REPORT INCLUDING THE VA LUE OF RESALE OF SODA IS NOT CORRECT. THE ASSESSEES MANUFACTURING A CTIVITY FOR ITS SALE AND JOB WORK DONE FOR OTHER PARTIES ARE ONLY TO BE CONSIDERED FOR THE PURPOSE OF WORKING OUT OF GROSS PROFIT FROM THE MAN UFACTURING ACTIVITY. THE LEARNED DR, THEREFORE, SUBMITTED THAT SINCE THE REPLY OF THE ASSESSEE WAS NOT SUPPORTED BY RELEVANT EVIDENCE, TH EREFORE, BOOK RESULTS WERE CORRECTLY REJECTED AND HIGHER GROSS PR OFIT RATIO WAS RIGHTLY APPLIED. THEREFORE, LEARNED CIT(A) SHOULD NOT HAVE DELETED THE ADDITION. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW AND DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. NO DEFINITE FINDING OF FACTS ON UNACCOUNTED PURCHASES HAS BEEN GIVEN IN THIS CASE. SALE TO M/S. GOPAL FABRICS HAS BEEN PROPERLY RECORDED. VALUE OF THE SALE IS SAME ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 10 AND CONFIRMED BY M/S. GOPAL FABRICS. THE MISTAKE OF THE ACCOUNTANT WAS PROPERLY EXPLAINED REGARDING WEIGHT OF THE RAW MATERIAL SOLD; DIFFERENCE IS ULTIMATELY ABOUT 55 MT WHICH IS VERY NORMAL. IN THE ACCOUNTS OF M/S. GOPAL FABRICS ULTIMATELY THE DIFFERENCE WAS FO UND OF RS.5,000/- FOR WHICH SEPARATE ADDITION IS MADE AND CONFIRMED B Y THE LEARNED CIT(A). THE SMALL ADDITION WOULD NOT PROVE SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS. NO UNACCOUNTED PURCHASE HAS BEEN FOUND AND THE OVER ALL GROSS PROFIT OF THE ASSESSEE WAS BETTE R. THE RATIO OF CONSUMPTION AND ITS PATTERN WAS FOUND TO BE SIMILAR AS COMPARED WITH THE EARLIER YEARS. THE ASSESSEE FILED COMPLETE DETAILS TO EXPLAIN THAT THERE IS NO SPECIFIC DEFECT POINTED OUT IN THE BOOKS OF ACCOUNTS AND THE WORKING OF THE ASSESSEE. THEREFORE, FOR SMA LL DIFFERENCE REJECTION OF THE BOOKS OF ACCOUNTS MAY NOT BE JUSTI FIED. THE LEARNED DR POINTED OUT FROM PARA 9 OF THE IMPUGNED ORDER TH AT THE LEARNED CIT(A) JUSTIFIED THE REJECTION OF THE BOOKS OF ACCO UNTS, HOWEVER, WE MAY NOTE THAT THE HONBLE RAJASTHAN HIGH COURT IN T HE CASE OF CIT VS GOTAN LIME KHANIJ UDYOG 256 ITR 243 HELD THAT MERE REJECTION OF BOOKS OF ACCOUNTS WOULD NOT NECESSARILY MEAN TO MAK E THE ADDITION. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE FINDINGS OF THE LEARNED CIT(A), WE ARE OF THE VIEW THAT THE LEARNED CIT(A) CONSIDERING THE TOTALITY OF THE FACTS AND CI RCUMSTANCES OF THE CASE RIGHTLY DELETED THE ADDITION. THE LEARNED DR R ELIED UPON THE ORDER OF THE AO BUT NO MATERIAL IS PRODUCED ON RECO RD TO CONTRADICT THE FINDING OF FACT RECORDED BY THE LEARNED CIT(A) IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY JUSTIFICAT ION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL. SAME IS ACCORDINGLY DISMISSED. ITA NO.4309/AHD/2007 DCIT, CC -2(2), AHMEDABAD VS SHRI RAM MINECHEM PVT. LTD. 11 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-04-2011 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 21-04-2011 LAKSHMIKANT/- 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 D Y. REGISTRAR, ITAT, AHMEDABAD