ITO, New Delhi V. M/s. Jaintex Apparels Pvt. Ltd., New Delhi

ITA 4845/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81495 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Assessee Lawyers: R K KAPOOR
• Keywords: Business income
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER & SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 4845/DEL/2010 ASSESSMENT YEAR: 2004-05 ITO, VS. JAINTEX APPARELS PVT. LTD., WARD 4(1), ROOM NO. 418, 43-E, CONNAUGHT PLACE, C.R. BLDG., I.P. ESTATE, NEW DELHI. NEW DELHI. AAACJ163OQ (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.N. BHATIA, DR RESPONDENT BY : SH. PRADEEP DINODIA, CA & SH. R.K. KAPOOR, CA ORDER PER B.C. MEENA, A.M. THIS IS THE APPEAL FILED BY THE REVENUE EMANATES FR OM THE ORDER OF THE CIT(A)-VII, NEW DELHI DATED 16/08/2012. 1.1 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MAKI NG PURCHASES OF READYMADE GARMENTS FROM VARIOUS MERCHANDISERS FOR M /S JAIN SONS. THESE GOODS ARE SOLD TO M/S JAIN SONS AT ACTUAL COS T PLUS 2% HANDLING CHARGES AND APPLICABLE SALES TAX. THIS IS DONE TO ENABLE CENTRALIZATION OF SALES TAX ACCOUNT WITH ONE ENTITY ONLY AND SUCH PRA CTICE WAS BEING FOLLOWED BY ASSESSEE FROM MORE THAN 15 YEARS AND THE SAME HA S BEEN ACCEPTED BY THE DEPARTMENT WHILE FRAMING THE ORDERS U/S 143(3) OF THE INCOME TAX ACT IN THE EARLIER YEARS (FOR EXAMPLE ASSESSMENT YEAR 1 995-96). THE AO MADE AN ADDITION OF RS. 1,23,31,637/- ON ACCOUNT OF UNAC COUNTED OF CONSIGNMENT ITA NO. 4845/DEL/2010 2 SALES AND ALSO MADE AN ADDITION OF RS. 20,39,828/- ON ACCOUNT OF UNACCOUNTED COMMISSION ON THE SALES. CIT(A) HAS DE LETED THE ADDITION. 2. NOW THE REVENUE IS IN APPEAL BY TAKING THE FOLLO WING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,23,31,637/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED OF CONSIGNMENT SALES. 2.1THE LD. CIT(A) IGNORED THE FINDING RECORDED BY THE AO AND THE FACT THAT THE ASSESSEE ITSELF HAD CONCEDED DURING THE ASSESSMENT PROCEEDINGS THAT THE INCOME IN QUESTION HAS NOT BEEN INCLUDED IN THE PROFIT & LOSS ACCOUNT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 20,39,828/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED COMMISSION RECEIVED BY THE ASSESSEE. 3.1THE LD. CIT(A) IGNORED THE FINDINGS RECORDED BY THE AO AND THE FACT THAT THE ASSESSEE ITSELF HAS CONCEDED DURING THE ASSESSMENT PROCEEDINGS THAT THE INCOME IN QUESTION HAS NOT BEEN INCLUDED IN THE PROFIT AND LOSS ACCOUNT. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR DEMAND ANY GROUND OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. ITA NO. 4845/DEL/2010 3 3. THE GROUND NO. 1 AND 4 ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION, HENCE, SAME ARE DISMISSED. 4. IN THE GROUND NO. 2 & 2.1 THE ISSUE IS AGAINST D ELETING THE ADDITION OF RS. 1,23,31,637/-. THE CIT(A) HAS DELETED THE ADDI TION BY HOLDING AS UNDER: 3.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT, THE FINDINGS OF TH E AO AND THE FACTS ON RECORD. THE CRUX OF THE MATTER REVOLVES ROUND REJECTION OF ASSESSEES BOOKS OF ACCOUNTS BY THE AO. SECTION 145(3) HAS BEEN SPECIFICALLY RELIED UPON BY THE AO IN THIS CASE. I T READS AS FOLLOWS: WHERE THE AO IS NOT SATISFIED ABOUT THE CORRECTNES S OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB- SECTION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UND ER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED B Y THE ASSESSEE, THE AO MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. IT IS CLEAR FROM ITS PLAIN READING THAT THE AFOREMENTIONED SUB-SECTION HAS THE FOLLOWING INGREDIENTS: (A) THE ASSESSEE IS REQUIRED TO REGULARLY EMPLOY EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING AS PER THE ACCOUNTING STANDARDS AND MEANING AND CONSEQUENCES OF NOT REGULARLY FOLLOWING THE SYSTEM OF ACCOUNTING: ITA NO. 4845/DEL/2010 4 (B) THE AO NOT BEING SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE AND THE VERY MEANING OF CORRECTNESS AND COMPLETENESS OF ACCOUNT; AND (C) MAKING OF AN ASSESSMENT IN THE MANNER PROVIDED U/S 144; REGARDING THE COMPLETENESS OF ACCOUNTS IT REFERS NO T ONLY TO THE ACCOUNTING ENTRIES FOR ALL THE TRANSACT IONS DONE IN THE PREVIOUS YEAR BUT ALSO TO THE LIST OF B OOKS OF ACCOUNTS. IN OTHER WORDS, THE FAILURE TO MAINTA IN CERTAIN REGISTER OR ANY OTHER BOOKS MAKES THE ACCOUNTS OF THE ASSESSEE INCOMPLETE. ON THE OTHER HAND, THE CORRECTNESS OF THE ACCOUNT REFERS TO THE QUALITY OR ACCURACY OR RELIABILITY OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND IT COVERS RECONCILAB LE MISTAKES OR ERRORS IN ACCOUNTS. THUS, THE COMPLETENESS REFERS TO THE LIST OF BOOKS OF ACCOUNT S AND ENTRIES THEREIN AND THE ACCURACY REFERS TO THE QUALITY OF THE ACCOUNTS OF THE ASSESSEE. 3.3 IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT (1964) 26 ITR 775 (SC) THE HONBLE SUPREME COURT HAD DECIDED THAT ONCE THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE REJECTED THEN THE PROFIT HAS TO BE ESTIMATED ON THE BASIS OF PROPER MATERIAL AVAILABLE. HOWEVER, THE AO IS NOT ENTITLED TO MAKE A PURE GUESS & MAKE ESTIMATION WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. THERE MUST BE SOMETHING MORE THAN MERE SUSPICION TO SUPPORT SUCH ADDITION. THE HONBLE SUPREME COURT HAS RECONFIRMED THE ITA NO. 4845/DEL/2010 5 EARLIER STAND IN THE CASE OF CIT VS. K.Y. PILLIAH & SONS (1967) 64 ITR 411 (SC), WHERE IT HAS BEEN DECIDED THAT ANY LUMP SUM ADD BACK TO THE TRADING RESULT IF FOUND JUSTIFIED MUST BE DONE IN PROPER EXERCISE OF DISCRETION OBJECTIVELY & JUDICIOUSLY ON THE BASIS OF RELEVANT MATERIAL. REGARDING THE AO BEING NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ASSESSEES ACCOUNTS, THE CALCUTTA HIGH COURTS JUDGMENT IN THE CASE OF ASHOKE REFRACTORIES (P) LTD. VS. CIT (2005) 279 ITR 457 IS RELEVANT. IN THE SAID CASE, THE HONBLE HIGH COURT HELD THAT IN ORDER TO REJECT THE ACCOUNTS, THE AO HAS TO COME TO AN OPINION THAT THE INCOME CANNOT BE PROPERTY DEDUCED FROM THE ACCOUNTS SO MAINTAINED. IN ORDER TO ARRIVE AT SUCH CONCLUSION, IT MUST BE SHOWN THAT THE AO HAS TAKEN INTO CONSIDERATION RELEVANT FACTORS AND NOT OMITTED TO CONSIDER THE MATERIAL BEFORE HIM. 3.4 THE ABOVE SCOPE OF THE PROVISIONS OF SECTION 145 CONCLUSIVELY ESTABLISHES THE FACT THAT, WHAT IS IMPORTANT FOR REJECTION OF BOOKS IN THE AO BEING NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS AS SPECIFIED IN SECTION 145(3) AND IT IS NOT THE QUESTION OF ASSESSEE ESTABLISHING THE METHOD APPLIED IS FIT ENOUGH TO DEDUCE FROM THE ACCOUNTS THE CORRECT PROFITS. BUT, IT IS THE AOS OPINION WHICH IS IMPORTANT AND THE SAID OPINION SHOULD BE ABOUT EITHER THE CORRECTNESS OR COMPLETENESS OF THE ITA NO. 4845/DEL/2010 6 BOOKS. AS HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF ASHOKE REFRACTORIES (P) LTD. (SUPRA), HOWEVER, THE AO IS UNDER OBLIGATION TO TAKE INTO CONSIDERATION VARIOUS FACTORS AND NOT OMITTED CONSIDERING THE MATERIAL BEFORE HIM WHILE EXERCISING SUCH DISCRETION. 3.5 IN THE LIGHT OF THE ABOVE SCOPE OF SECTION 145(3), IF THE FACTS OF THE INSTANT CASE ARE EXAMINED, IT MAY BE SEEN THAT THE REJECTION WAS DONE WITHOUT ANY FINDING ON THE CORRECTNESS OR COMPLETENESS OF THE BOOKS OF ACCOUNT. IN VIEW OF THE ABOVE AND IN MY CONSIDERED OPINION, THE REJECTION THE BOOKS OF ACCOUNT U/S 145 OF THE I.T. ACT, WHILE ACCEPTING THE BOOKS AS CORRECT AND COMPLETE, IS AN INVALID ASSUMPTION OF JURISDICTION BY THE AO AS HE DID NOT DISPUTE THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND COMPLIANCE OF THE ACCOUNTING STANDARD. THE MAIN REASON FOR ESTIMATING THE SALES FOR MAKING THE ADDITION IS THE FACT THAT ACCORDING TO THE AO, THE ASSESSEE HAS NOT SHOWN THE CONSIGNMENT SALES IN ITS TURNOVER. THIS ADDITION IS UNDER THE WRONG BELIEF THAT CONSIGNMENT SALES SHOULD BE INCLUDED IN THE TURNOVER OF THE ASSESSEE, WHICH IS CLEARLY AGAINST THE GUIDELINES ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. IN ANY CASE, THE AO HAS FAILED TO TAKE INTO ACCOUNT THE CORRESPONDING FIGURES OF THE CONSIGNMENT PURCHASES. IN ANY CASE, THE AO HAS FAILED TO TAKE INTO ACCOUNT THE CORRESPONDING FIGURES OF THE ITA NO. 4845/DEL/2010 7 CONSIGNMENT PURCHASES. IN ANY CASE, THE AO HAS FAILED TO GIVE ANY OPPORTUNITY TO THE ASSESSEE FOR EXPLAINING AND ADDUCING EVIDENCE AS TO WHY CONSIGNMENT SALES SHOULD NOT BE INCLUDED IN THE SALES-TURNOVER OF THE ASSESSEE. ON THE OTHER HAND, THE ASSESSEE HAD EXPLAINED VIDE LETTER DATED 11.9.2009 THAT THE GOODS WERE RECEIVED ON CONSIGNMENT BASIS AND BELONG OF THE CONSIGNEE AND ASSESSEE WAS ONLY ENTITLED TO COMMISSION THEREON AND THE SALES WERE ON BEHALF OF THE CONSIGNEE ONLY AND THE PROPERTY IN THE GOODS DID NOT VEST WITH THE ASSESSEE. IN THE SAID LETTER, TH E ASSESSEE RECONCILED THE PURCHASES BOOKED BY M/S JAINSONS WITH THE SALES BOOKED BY THE ASSESSEE, WHICH IS IGNORED BY THE AO. THE AO HAS NEITHER REJECTED THE EXPLANATION NOR COMMENTED ADVERSELY THEREON. THOUGH THE AO HAS REFERRED TO SOME DIFFERENCES IN THE PARTIES ACCOUNTS, THESE WERE NEVER BROUGHT TO THE NOTICE OF THE ASSESSEE FOR EXPLANATION/RECONCILIATION. IN ANY CASE, IT IS OBSERVED THAT THE DISCREPANCIES POINTED BY THE AO ARE FULLY RECONCILABLE. THE RECONCILIATION WOULD BE AS UNDER: AMOUNT (RS.) PURCHASE BOOKED BY JAINSONS 3,77,66,309/- LESS: CONSIGNMENT SALE BY JAINTEX TO JAINSONS 75,01,762 /- 3,02,64,547/- LESS: SALES TAX NOT INCLUDED IN SALE 5,96,183 /- SALE BOOKED BY JAINTEX APPARELS 2,96,68,364 /- PVT. LTD. ITA NO. 4845/DEL/2010 8 3.6 THE AO HAS WRONGLY ASSUMED THAT THE COMMISSION @ 15% MIGHT HAVE BEEN EARNED ON PURCHASED GOODS. AS POINTED OUT BY THE APPELLANT, THE COMMISSION IS ON CONSIGNMENT SALES, WHICH DOES NOT TANTAMOUNT TO PRESUMPTION OF PURCHASE. MOREOVER, THERE ARE TWO VARIABLE RATES OF COMMISSION, ONE ON REGULAR CONSIGNMENT SALES AND OTHER ON DISCOUNT SALES. THE RATE OF 15% WAS ON DISCOUNT SALES, AS WILL BE EVIDENT FROM THE LETTER DATED 24.1.2003. THE ASSESSEE HAS GIVEN THE ACTUAL FIGURE OF CONSIGNMENT SALES AND THIS COULD NOT BE SUBSTITUTED BY ANY ASSUMED FIGURES, AS ESTIMATED BY THE AO ON MERE PRESUMPTION, AND WITHOUT ANY REJECTION OF ACCOUNTS. 3.7 IT IS ALSO OBSERVED THAT THE SALES FIGURES OF THE ASSESSEE HAVE BEEN ACCEPTED BY THE SALES-TAX AUTHORITIES AFTER DUE VERIFICATION. THE FACT OF CONSIGNMENT SALES IS DULY MENTIONED IN THE SAID ORDER. RELIANCE IS PLACED ON THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF CIT VS. ANANDHA METAL CORPORATION (2005) 273 ITR 262, WHEREIN IT WAS HELD THAT WHERE RECORD OF THE ASSESSEE HAS BEEN ACCEPTED BY THE SALES TAX AUTHORITIES WITHOUT ANY ADVERSE VIEW THE SANCTITY OF THE SAME SHOULD ALSO BE ACCEPTED BY THE INCOME TAX AUTHORITIES. MOREOVER I FIND THAT THE AO, CENTRAL CIRCLE 15, NEW DELHI WHILE COMPLETING THE ASSESSMENT FOR THE AY 2004-05 IN THE CASES OF THE ASSESSEE AS WELL AS OF M/S ITA NO. 4845/DEL/2010 9 JAINSONS HAD ACCEPTED THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS & THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. 3.8 IN THE CASE ON HAND, THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING A PARTICULAR METHOD OF ACCOUNTING. ITS ACCOUNTS ARE AUDITED U/S 44AB OF THE I.T. ACT. AUDITORS HAVE BEEN CONSISTENTLY CERTIFYING THAT THE ASSESSEE HAS BEEN REGULARLY FOLLOWING THE METHOD OF ACCOUNTING AND THAT THE ANNUAL PROFITS CAN BE PROPERLY DEDUCED FROM SUCH METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE. THE AUDITORS OVER THE YEARS HAVE ALSO BEEN CERTIFYING THAT THE ACCOUNTS ARE REGULARLY MAINTAINED AND ARE COMPLETE IN THE SENSE THAT THERE IS NO SIGNIFICANT OMISSIONS THEREIN CHANGE IN LAW WHETHER ENACTED OR DECLARED BY THE SUPREME COURT. THE ASSESSING AUTHORITY HAS TO LOOK INTO THE SUBSTANCE OF THE SITUATION AND DECIDE THE MATTER IN SUCH A MANNER THAT NEITHER IS PUT TO UNREASONABLE LIABILITY NOR THE ASSESSEE IS SUBJECTED TO UNREASONABLE HARDSHIP. NO DOUBT IT ISNOT ONLY THE RIGHT BUT ALSO THE DUTY OF THE AO TO CONSIDER WHETHER OR NOT THE BOOKS DISCLOSED THE TRUE STATE OF ACCOUNTS AND THE CORRECT INCOME CAN BE DEDUCED THEREFROM. BUT THESE RIGHTS AND DUTY HAVE TO BE EXERCISED IN SUCH A MANNER AND HAVE TO BE BASED ON COGENT REASONS AND SUFFICIENT MATERIAL. THE REASONS GIVEN BY THE AO IN THIS CASE ON THE FACTS AND CIRCUMSTANCES IS ITA NO. 4845/DEL/2010 10 DEMONSTRATED, AS ERRONEOUS BY THE ASSESSEE. REJECTION OF BOOKS OF ACCOUNT SHOULD NOT BE DONE LIGHT HEARTEDLY AS HELD BY THE KERALA HIGH COURT IN THE CASE OF ST. TERESAS OIL MILLS VS. STATE OF KERALA (1970) 76 ITR 365 AND BY THE ASSAM HIGH COURT IN THE CASE OF TOLARAM DAGA VS. CIT (1966) 59 ITR 632. ACCOUNTS REGULARLY MAINTAINED IN THE COURSE OF BUSINESS HAVE TO BE TAKEN AS CORRECT UNLESS THERE ARE STRONG AND SUFFICIENT REASONS TO INDICATE THAT THEY ARE UNRELIABLE AND INCORRECT. THE AO HAS TO PROVE SATISFACTORILY THAT THE BOOKS OF ACCOUNTS ARE UNRELIABLE OR INCORRECT OR INCOMPLETE BEFORE HE CAN REJECT THE ACCOUNTS AND THIS CAN BE DONE BY SHOWING THAT IMPORTANT TRANSACTINS ARE OMITTED OR IF PROPER PARTICULARS AND VOUCHERS ARE NOT FORTHCOMING OR THE ACCOUNTS DO NOT INCLUDE ENTRIES RELATING TO A PARTICULAR CLASS OF BUSINESS. WHEN A RETURN IS FURNISHED AND ACCOUNTS ARE PUT IN SUPPORT OF THAT RETURN, THE ACCOUNT SHOULD BE TAKEN AS THE BASIS FOR ASSESSMENT. THEY SHOULD NOT BE REJECTED BECAUSE THEY ARE COMPLICATED. THE PROCEDURE OF THE AO IS OF JUDICIAL NATURE AND IN MAKING THE ASSESSMENT HE SHOULD PROCEED ON JUDICIAL PRINCIPLES. IF EVIDENCE IS PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS RETURN IT SHOULD BE ACCEPTED UNLESS IT IS REBUTTED BY ADMISSIBLE EVIDENCE AND NOT BY MERE HEARSAY. 3.9 THUS FOR ALL THESE REASONS AND AS THE ASSESSEE HAS PRODUCED SUFFICIENT MATERIAL JUSTIFYING ITS ITA NO. 4845/DEL/2010 11 CLAIM AND AS IT HAS REPELLED THE CONTENTIONS ADVANCED BY THE AO WITH COGENT MATERIAL AND EVIDENCE, I AM OF THE CONSIDERED VIEW THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AO WAS NOT CORRECT IN MAKING THE ADDITION OF RS. 1,23,31,637/- BY ESTIMATING THE SALES AT RS. 4,20,00,000/- AS AGAINST DECLARED SALES OF RS. 2,96,68,363/-. THE ADDITION ON ACCOUNT OF TRADING TO THE EXTENT OF RS. 1,23,31,637/- IS, THEREFORE, DIRECTED TO BE DELETED. 5. WE HAVE HEARD BOTH THE SIDES OF THIS ISSUE AND T HE LD. AR RELIED ON THE ORDER OF THE CIT(A) AND ALSO SUBMITTED THE EXPL ANATION IN THE FORM OF EXAMPLE. THE RELEVANT PORTION OF THE SAME IS REPRO DUCED AS UNDER: WE ARE ENCLOSING HEREWITH, AS AN EXAMPLE, DETAILS OF STATEMENT FORWARDED BY M/S JAINSONS TO THE ASSESSEE FOR THE MONTH OF JULY, 2003. YOUR HONOUR WOULD FIND THAT SERIAL NO. 1, ITEM CODE 004/4502204 INDICATES ITEM PK-22 WHICH HAS BEEN SOLD BY M/S JAINSONS (PB-3). THE QUANTITY OF THIS ITEM IS 8 PI ECES. IT HAS BEEN SOLD @ RS. 310/- FOR A TOTAL PRICE OF R S. 2,480/- BY M/S JAINSONS. AGAINST THIS, THE ASSESSE E HAS RAISED A BILL ON JAINSONS I.E. BILL NO. 8 AT SE RIAL NO. 1 (PB 12) @ RS. 232.50 PER PIECE FOR A TOTAL PR ICE OF 8 PIECES AT RS. 1,860/-. TO GIVE A PRECISE CALCULATION, IT WORKED OUT AS UNDER: 1) PRICE AT WHICH EACH ITEM SOLD BY JAINSONS RS. 310.00 (PB 3) 2) LESS: 22% DISCOUNT ON THE ABOVE AS GIVEN RS. 68.20 BY CONSIGNOR. RS. 241.80 THIS HAS BEEN BILLED BY THE ASSESSEE TO M/S JAINSON S AS FOLLOWS: 1) PRICE OF ONE ITEM AT SERIAL NO. 1 RS. 232.50 [ PB 12 ] ITA NO. 4845/DEL/2010 12 2) ADD: 4% SALES TAX RS. 9.30 RS. 241.80 THIS IS JUST AN EXAMPLE. YOUR HONOUR WOULD FIND TH AT ANY ITEM CAN BE SIMILARLY TALLIED WITH THE TOTAL SALES STATE MENT AND THE BILLS RAISED BY THE ASSESSEE ON M/S JAINSONS BASED ON ACT UAL SALES. THIS WOULD CLEARLY PROVE THE CONTENTION OF THE ASSESSEE THAT ON CONSIGNMENT SALES, THE ASSESSEE DOES NOT CHARGE ANY MARK UP EXCEPT HANDLING CHARGES @ 2%, WHICH IS MENTIONED AT THE EN D OF EACH BILL. THE CIT(A) REQUIRED THE ASSESSEE ON 29 TH JULY 2010 TO PRODUCE THESE RECORDS FOR ALL THE YEARS. THESE RECORDS WERE PROD UCED AND VERIFIED BY THE CIT(A) ON 30 TH JULY, 2010. ONLY UPON VERIFICATION AND BEING SATISFIED ON THE ACCURACY OF THE ABOVE, THE CIT(A) PASSED THE ORDER DATED 16.8.2010. YOUR HONOUR HAS ALSO DIRECTED THE ASSESSEE TO FILE A COPY OF SALES-TAX ORDER FOR THE RELEVANT YEAR. THE ORDER H AS ALREADY BEEN FILED AND IS AVAILABLE AT PAGES 46 AND 47 OF THE PAPER BOOK . 6. AFTER CONSIDERING ALL THE ASPECTS OF THE CASE, W E FIND THAT ASSESSEE WAS REGULARLY EMPLOYING THE SYSTEM OF ACCOUNTING AS PER THE ACCOUNTING STANDARD. THE AO WAS NOT JUSTIFIED AND REJECTING T HE BOOKS OF ACCOUNT BY HOLDING THAT THE CORRECTNESS AND COMPLETENESS OF TH E ACCOUNT WAS NOT SATISFIED. THE ADDITION FOR CONSIGNMENT SALES NOT INCLUDED IN THE TURNOVER OF THE ASSESSEE IS AGAINST THE GUIDELINES ISSUED BY THE INSTITUTE OF THE CHARTERED ACCOUNTANTS OF INDIA. THE GOODS RECEIVE D ON CONSIGNMENT BASIS BELONGS TO CONSIGNER AND ASSESSEE WAS ENTITLE D FOR COMMISSION THEREON. KEEPING THESE FACTS IN VIEW, WE FIND NO M ERITS IN THIS GROUND OF REVENUES APPEAL. HENCE, THE SAME IS DISMISSED. 7. IN THE GROUND NO. 3 THE ISSUE IS WITH REGARD TO THE DELETION OF THE ADDITION OF COMMISSION WORKED OUT ON UNACCOUNTED SA LES AS HELD BY THE ITA NO. 4845/DEL/2010 13 AO. SINCE IN THE EARLIER PARA WE HAVE CONFIRMED TH E DELETING OF THE ADDITION MADE ON UNACCOUNTED CONSIGNMENT SALES AS H ELD BY THE CIT(A), THEREFORE, THIS GROUND FOR UNACCOUNTED COMMISSION O N THE CONSIGNMENT SALES BECOMES INFRUCTUOUS. KEEPING THESE FACTS IN VIEW THIS GROUND OF REVENUE ALSO STANDS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 06/0 8/2014 SD/- SD/- (GEORGE GEORGE K.) (B.C. M EENA) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 06/08/2014 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR ITA NO. 4845/DEL/2010 14 ITA NO. 4845/DEL/2010 15