PREM CHAND JAIN, Jaipur V. ADDL. CIT, Kota

ITA 486/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99314 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DILIP SHARMA JCIT DHK
• Keywords: Rejection of books of accounts; Opportunity of being heard; Cost of acquisition; Onus to prove
• Section: 131; 68

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 VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 486/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI PREM CHAND JAIN P/O M/S. BAJAJ SCRAP TRADERS, 557, CHAWANI, KOTA CUKE VS. THE ADDL. CIT RANGE -2 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABTPJ 9673 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI DILIP SHARMA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/07/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21/09/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 21-03-2013 FOR THE ASSESSMENT YEAR 2008-09 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED BY THE A SSESSEE:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT BY APPL YING PROVISIONS OF SECTION 145(3) OF THE ACT. 1.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN MAKING TRADING ADDIT ION OF RS. 9,76,312/- BY APPLYING GROSS PROFIT RATE OF 2.3 4% I.E. ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 2 AVERAGE LAST TWO PRECEDING YEARS AS AGAINST RATE OF 1.90% DECLARED BY THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE / ADDITION OF RS. 5,39,791/ - OUT OF FOLLOWING. CAR & CONVEYANCE EXPENSES RS. 21,952/- WAGES EXPENSES RS. 1,57,952/- SHOP EXPENSES RS. 15,877/- MOBILE & TELEPHONE EXPENSES RS. 19,660/- TRANSPORTATION EXPENSES RS. 28,919/- HOUSE HOLD EXPENSES RS. 1,06,815/- PENALTY EXPENSES RS. 1,78,540/- CASH CREDITORS RS. 39,400/- COMMISSION EXPENSES RS. 22,000/- 2.1 THE LD. CIT(A) HAS FURTHER ERRED ON FACTS AND I N LAW IN NOT ALLOWING THE SET OFF OF TRADING ADDITION OF RS. 9,76,312/- CONFIRMED BY HIM AGAINST THE DISALLOWANC E / ADDITION IN RESPECT OF TRANSPORTATION EXPENSES, HO USE HOLD EXPENSES AND CASH CREDITOR MADE BY HIM RESULTING IN TO DOUBLE ADDITION. 2.1 FIRST OF ALL, WE TAKE UP GROUND 1 AND 1.1 OF TH E ASSESSEE WHEREIN BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE TRADING OF IRON SCRAP IN THE NAME AND STYLE OF M/S. BAJAJ SCRA P TRADERS AND THE AO HAS OBSERVED THEREIN AS UNDER:- 1- O;KIKFJD VFHKO`F) %& DJNKRK US VKYKSP; O'KZ ESA DQY FCH :-22]02]99]282@& NKKZBZ GS FTL IJ LDY EQUKQK :-41]78]691@& CRK;K GS TKS 1-90 IZFRKR DH NJ LS VKRK GS A FOR O'KZ 2006&07 DS NKSJKU DQY FCH :-7]9 8]58]688@& NKKZ DJ LDYEQUKQK 18]26]910@& CRK;K GS TKS 2-29 IZFRKR VKRK GS A BLH IZDKJ FOR O'KZ 2005&06 DS NKSJKU DQY FCH :-5]30]61]611@& NKKZ DJ LDY EQUKQK :-12]8 0]946@& CRK;K GS TKS 2-41 IZFRKR VKRK GS A LDY EQUKQS DH NJ VKYKSP; O'KZ DS NKSJKU FINYS NKSUKSA FORH; O'KKSZ ESA ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 3 NKKZ;S X;S LDY EQUKQS DH NJ LS DKQH DE GS A DJNKRK }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|KSRD GS A DJNKRK LS LDY YKHK E SA DEH DS DKJ.K IZLRQR DJUS DK FUOSNU FD;K X;K A MLUS LQUOKBZ DS NKSJKU VOXR DJK;K FD BL FORH; O'KZ ESA FINYSA O'KKSZ DS EQDKCYS VF/KD FCH GQBZ GSA] VR% LDY EQUK QS DH NJ ESA DEH VKBZ GS A RRIPKR~ BL LECU/K ESA [KJHN FCYKSA LS FCH FCYKSDA DK FEYKU DJUS GSRQ DJNKRK }KJK IZLRQR YS[KK IQLRDKSA ,O [KJHN O FCH FCYKSA DH VKAFKD TKWAP DH XBZ A DJNKRK }KJK TKJH FCH FCYKSA ESA LSI DK FOOJ.K] MLDH FDLE BR;KFN DK FOOJ.K FY[K K GQVK UGHA GS] VR% [KJHN FCYKSA LS NKKZ;S X;S [KJHN EWY; DS VK/KKJ IJ LDY YKHK DH LKF KZDRK FL) DJUS DS FY;S DGK X;K IJURQ DJ FU/KKZJ.K DH DK;ZOKGH DS NKSJKU DKSBZ LI'V VK/KKJ IZLRQR UGHA FD;K X;K A DJNKRK US EKY DK DKSBZ LVKWD JFTLVJ VFKOK NSFUD YS[ KK TKS[KK IZLRQR UGHA FD;K] FTLLS DH [KJHN O FCH DS OKLRFOD EKFTZU DK VKADYU FD;K TK LDS A BL IFJIZS{; ESA DJNKRK }KJK [KJHN O FCH DS FCYKSA DS VK/KKJ IJ OKL RFOD YKHK ,OA YKHKNJ DK RQYUKRED V/;;U FD;K X;K A DJNKRK }KJK IZLRQR YS[KK IQLRDKSA DK VKAFKD LR;KIU FD;K X;K FTLDS NKSJKU FUEUFYF[KR VFU;FERRK;SA IK;H XBZ %& V DJNKRK DS ; ,OA FO; GSRQ IZLRQR FOOJ.K NS[KUS IJ IK;K X;K FD VFURE LVKWD ESA YKSGS ESA DEH NKKZBZ GS TKS LKY DS VFURE EGHUS ESA GH GKSUK CRK;K GS TKS LGH UGHA GSA A BL O;OLK; DH IZD`FR DKS NS[KRS GQ, BL GN RD DEH GKS UK HKH LEHKO UGHA GSA A C DJNKRK DS TUOJH LS EKPZ DH FCH DK VKSLR EWY; [ KJHN EWY; LS DE IK;K X;K FTLDK DKJ.K DJNKRK DK VIUH IKFJOKFJD QEKSZ ESA YKHK DK FOHKKTU GKSUK IK;K X;K A L DJNKRK DS VFURE LVKWD DH X.KUK DJNKRK }KJK CRKB Z XBZ I}FR ,QVKBZ,QVKS DS VUQLKJ U YSDJ VKSLRU VK/KKJ IJ YH XBZ GS TKS DE GSA A US SRK ,OA FOSRKVKSA DH LWPH IZLRQR DH FTLDK YS[KK IQLRDKSA LS LR;KIU FD;K X;K I K;K DH ES- VFURK ,AVJIZKBZTST] ES- VK;Z QKM.MH BUTH- DKS DJNKRK US FNU&IZFRFNU 19&20 GTKJ ESA UXN ESA FD;K CRK;K A BLH IZDKJ VU; EKEYKSA ESA HKH X;K A ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 4 DJNKRK DH JKSDM+ CGH ESA I;KZIR 'KS'K JGRS GQ, HKH VQDMKSA ESA UXN ESA HKQXRKU FD;K X;K A DJNKRK }KJK [KPKSZ DS HKQXRKU ESA HKH :- 20]000@& L S DE VQDM+KSA ESA DJUK CRK;K GS TCFD JKSDM CGH ESA I;KZIR 'KS'K JGK GS A DJNKRK DS VU; [KPKSZ ESA TSLS&VKALIKSVZ [KPZ :- 1] 44]596@& DK HKQXRKU UIXN ESA FNU&IZFRFNU 19&20 GTKJ ESA NSUK RFKK FUEKZ.K [KPZ : -9]72]000@& ESA LS :-2]84]410@& NR DQVKBZ DS NKKZ;S GQ, GS TKS VLKEKU; [KPZ GS VKS J RF;KSA DKS NS[KRS GQ, TKS LAHKO UGHA GKS LDRK A MIJKSDR RF;KSA DS VK/KKJ IJ DJNKRK }KJK NKKZ;H X;H LDY YKHK NJ PWAFD OKLRFOD IZRHR UGH GKSRH GS] VR% DJNKRK DKS FNUKAD 28@12@2010 DKS IKBZ XBZ LHKH DFE;KSA DS CKJS ESA CRK;K X;K A LKFK GH DJNKRK DKS VOXR DJK;K X;K FD VK IDS EKEYS ESA YKHK DH LGH&LGH X.KUK DJUS DS FY, VKSLRU YKHK NJ LS X.KUK D ;KSA U DH TK;S FTLDS TOKC ESA DJNKRK US VKMZJ 'KHV FNUKAD 28@12@2010 IJ VIUH LGER H NH QKSVKS IZFR LAYXU GS A DJNKRK DS }KJK LVKWD RFKK FCH DK DKSBZ EK=KRED O X Q.KKRED FOOJ.K UGH J[KK X;K GS A VR% DJNKRK DS LDY YKHK DK IQU% FU/KKZUJ.K VKO;D GS A BLFY, DJNKRK DH O;KIKJ LS VK; DS LAHKKFOR {KJ.K LS JKTLO GKFU DKS DE DJUS GSR Q VK;DJ VF/KFU;E 1961 DH /KKJK 1453 DS IZKO/KKUKSA DKS YKXW DJRS GQ;S] DJNKRK DS }KJK NFKZR LDY YKHK DKS VKSLR VK/KKJ IJ 2-34 IZFRKR VUQEKFUR FD;K TKRK GS A DJNKRK DS I ZDJ.K ESA DJNKRK }KJK ?KKSF'KR DQY FCH :-22]02]99]282@& IJ LDY YKHK NJ 2-34 IZFRKR D H NJ LS LAXF.KR FD;K TKRK GS ,OA VURJ DH JKFK 51]55]003&41]78]691 :-9]76]312@ & DJNKRK DH DJ ;KSX; VK; ESA TKSM+H TKRH GSA A IN NUTSHELL, THE AO REJECTED THE BOOKS OF ACCOUNT O F THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 145(3) OF THE AC T. THEREAFTER, THE AO MADE TRADING ADDITION OF RS. 9,76,312/- BY APPLYING THE GROSS PROFIT RATE OF 2.34% I.E. TAKING THE MEAN OF LAST TWO PRECEDING YEARS AS AGAINST GROSS PROFIT RATE OF 1.90% DECLARED BY THE ASSESSEE FOR T HE ASSESSMENT YEAR 2008-09. 2.2 THE LD. CIT(A) HAS CONFIRMED THE REJECTION OF B OOKS OF ACCOUNT U/S 145(3) OF THE ACT AND ALSO UPHELD THE ADDITION OF R S. 9,76,312/- MADE BY ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 5 THE AO BY APPLYING THE GROSS PROFIT RATE OF 2.34% B ASED ON EARLIER YEARS RESULTS. THE OBSERVATION OF THE LD. CIT(A) TO THIS EFFECT IS AS UNDER:- 4.4 I HAVE CONSIDERED THE CONTENTION OF THE APPEL LANT AS WELL AS THE ASSESSMENT ORDER. IT IS SEEN THAT THE A SSESSEE'S CASE WAS TAKEN UP FOR SCRUTINY U/S 143(2) AS PER TH E PROVISIONS OF THE ACT. THE SECTION 143(2) IS IN THE STATUTE FOR PURPOSE OF VERIFICATION OF CORRECTNESS OF INCOME DE CLARED BY ASSESSEE. THE ONLY REQUIREMENT FOR THE ISSUANCE OF NOTICE U 143(2) IS THAT THE ASSESSING OFFICER SHOULD CONSIDE R IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIV E LOSS OR HAS NOT UNDER PAID THE TAX IN ANY MANNER. IN THE PRESENT CASE, THE CASE WAS SELECTED FOR SCRUTINY AS PER THE GUIDELINES OF THE CBDT WHICH ARE MEANT FOR THE GUIDANCE OF THE OFFICERS, SO THAT CASE WAS TAKEN UP FOR SCRUTINY AS PER THE PROVISIONS OF ACT. THE ASSESSEES CLAIM IS THAT BOOKS CAN NOT BE REJEC TED AS LOW G.P. WAS DUE TO INCREASE IN TURNOVER AND FO R THE STOCK VALUATION, IT WAS STATED THAT BOOKS HAVE BEEN AUDIT ED. IN THIS CONTEXT, IT MAY BE MENTIONED THAT THE AO HAS POINTE D OUT VARIOUS DEFECTS IN THE BOOKS OF ACCOUNTS VIZ. DECRE ASE IN GROSS PROFIT RATE AS COMPARED TO EARLIER YEARS ASSO CIATED WITH NON-MAINTENANCE OF QUALITATIVE AND QUANTITATIVE REC ORDS OF THE SALE BILLS AS WELL AS NON-MAINTENANCE OF THE ST OCK REGISTER. FURTHER THE CLOSING STOCK HAS BEEN VALUED AT THE AVERAGE RATE NOT AS PER THE FIFO METHOD FOLLOWED BY THE ASSESSEE. MOREOVER, THE SELLING RATE OF THE GOODS I N THE MONTH OF JANUARY TO MARCH, 2008 WERE LOWER THAN THE PURCHASE RATE OF THE GOODS. ALL THESE DEFECTS HAVE NOT BEEN CONTROVERTED BY THE ASSESSEE DURING ASSESSMENT STAG E AND ASSESSEE HAS MERELY CONTENDED THAT AVERAGE G.P. RAT E MAY BE APPLIED IN HIS CASE AS IS EVIDENT FROM THE NOTINGS IN THE ORDER THAT SHEET ANNEXED WITH THE ASSESSMENT ORDER. DURI NG ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 6 APPEAL, THE FINDINGS OF THE AO HAVE NOT BEEN CONTRO VERTED. IN VIEW OF ABOVE, ASSESSEE'S CONTENTION THAT BOOKS RES ULTS WERE REJECTED WITHOUT ANY BASIS IS NOT ACCEPTABLE. FURTH ER, THERE IS NOTHING ON RECORD THAT ASSESSEE WAS FORCED TO GIVE ANY CONSENT FOR APPLYING THE GROSS PROFIT RATE AS CLAIM ED BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, THE REJE CTION OF BOOKS OF ACCOUNT U 145(3) IS UPHELD AND ADDITION OF RS. 7,97,312/- BY APPLYING OF GROSS PROFIT RATE OF 2.23 4% BASED ON THE EARLIER YEARS RESULTS IS CONFIRMED. 2.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION PRAYING THEREIN TO THIS ISSU E IN QUESTION WHICH IS REPRODUCED AS UNDER:- 1. THE VARIOUS DISCREPANCIES POINTED OUT BY THE A O IS EXPLAINED AS UNDER:- (I) THE ASSESSEE MAINTAINS DAY TO DAY BOOKS OF AC COUNTS, WHICH IS SUBJECT TO AUDIT. THESE BOOKS ARE DULY SUP PORTED WITH BILLS AND VOUCHERS. THE LOWER AUTHORITIES HAVE NOT POINTED OUT ANY SALES OR PURCHASE WHICH IS OUT OF T HE BOOKS OR NOT VOUCHED. THE MONTH-WISE QUANTITATIVE DETAILS OF STOCK IS AT PAGE 3 OF THE PAPER BOOK. IN THESE FACTS, THE OBSERVATION OF AO REGARDING NON MAINTENANCE OF DAY TO DAY STOCK REGISTER HAS NO RELEVANCE & THUS THIS CANT BE A RE ASON FOR REJECTING THE BOOKS AND APPLYING PROVISIONS OF SECT ION 145(3). (II) THE SHORTAGE SHOWN IS JUSTIFIED IN AS MUCH A S ASSESSEE PURCHASES SCRAP FROM VARIOUS PARTIES AND DURING ITS BUNDLING AND CUTTING, MATERIAL IS LOST WHICH IS NOT USABLE AS ATTACHED WITH MATERIAL LIKE RUBBER/PAPER/PAINT/LOOS E IRON ETC. THE SHORTAGE IS JUST 0.0057% IN SHAPE OF DUST/ USELESS MATERIAL. THIS WAS EXPLAINED TO THE AO VIDE LETTER FILED IN ASSESSMENT PROCEEDINGS . THIS SHORTAGE IS REASONABL E AND ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 7 SHOWN MONTH WISE . THEREFORE, THE OBSERVATION OF TH E AO THAT IT IS SHOWN IN THE LAST MONTH OF THE YEAR IS I NCORRECT. (III) THE AO HAS INCORRECTLY OBSERVED THAT SELLIN G RATE IN SOME MONTHS IS LESS THAN THE PURCHASE COST IGNORING THAT THE IRON AND SCRAP WHICH HAS VARIOUS QUALITIES ARE NOT SOLD IN THE MONTH IN WHICH IT IS PURCHASED. THE ASSESSEE HA S MORE THAN 200MT OF STOCK IN OPENING AND IT IS NOT NECESS ARY THAT SCRAP PURCHASED IN A PARTICULAR MONTH IS SOLD IN TH E SAME MONTH. HENCE THE SELLING RATE CANNOT BE COMPARED WI TH THE PURCHASE RATE OF RELATED MONTH. THIS WAS EXPLAINED TO THE AO IN ASSESSMENT PROCEEDINGS (IV) IT IS A SETTLED LAW THAT THE CHOICE OF ADOPT ING A PARTICULAR METHOD OF VALUATION OF STOCK IS ON ASSES SEE. THE ONLY CONDITION IS THAT WHATEVER METHOD OF VALUATION IS ADOPTED BY THE ASSESSEE, THE SAME SHOULD BE CONSIST ENTLY FOLLOWED. THE ASSESSEE HAS CONSISTENTLY VALUED THE STOCK OF SCRAP AT AVERAGE RATE. THIS WAS EXPLAINED TO THE AO VIDE LETTER FILED IN ASSESSMENT PROCEEDINGS . THE BASIS OF THE VALUATION OF THE STOCK HAS BEEN ADOPTED BY THE ASSE SSEE SINCE LAST NUMBER OF YEARS. IN EARLIER YEARS, SUCH METHOD OF VALUATION OF STOCK HAS BEEN ACCEPTED. 2. THE LD. CIT(A) WITHOUT CONSIDERING THE ABOVE E XPLANATION OF THE ASSESSEE HAS INCORRECTLY HELD THAT THE VARIOUS DEFECTS POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNTS HAVE NOT BEE N CONTROVERTED BY THE ASSESSEE DURING THE ASSESSMENT STAGE OR IN A PPEAL. 3. OTHERWISE ALSO, ONLY BECAUSE STOCK REGISTER IS NOT MAINTAINED BUT QUANTITATIVE DETAILS ARE FURNISHED O R THERE ARE SOME INSIGNIFICANT DISCREPANCIES, BOOKS OF ACCOUNTS CANN OT BE REJECTED AS HELD IN THE FOLLOWING CASES:- (1) GANESH FOUNDRY VS. ACIT 78 TTJ 736 (JOD.) ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 8 (2) CIT VS. JACKSONS HOUSE 198 TAXMAN 385(DEL.) (3) M/S ANTIQUARIAT VS. ACIT XXXVII TAX WORLD 145 (JPR.) (4) DCIT VS. ASSOCIATED STONE INDUSTRIES LIMITED 22 TW 155 (JPR.) IN VIEW OF ABOVE, THE AO BE DIRECTED TO ACCEPT THE BOOKS OF ACCOUNTS. 4. WITHOUT PREJUDICE TO ABOVE, EVEN IF BOOKS OF ACCOUNTS ARE REJECTED IT IS NOT NECESSARY THAT THERE SHOULD BE A TRADING ADDITION. AFTER REJECTION OF BOOKS OF ACCOUNTS, ASSESSMENT IS TO BE MADE IN THE MANNER PROVIDED U/S 144. THIS WOULD REQUIRE TO TAKE INTO CONSIDERATION ALL THE CIRCUMSTANTIAL FACTS & THE PA ST HISTORY. IT IS TO BE NOTED THAT OVERALL GROSS PROFIT HAS BEEN INCREASED FROM RS. 18,26,910/- TO RS. 41,78,691/- AS COMPARED TO LAST YEAR. THE SLIGHT DECLINE IN THE G.P. RATE OF 0.39% IS ON ACCOUNT OF INCREASE IN THE TURNOVER, WHICH HAS INCREASED BY THREE TIMES AS COM PARED TO THE LAST YEAR. THE ASSESSEE IS INTERESTED IN THE VOLUME OF P ROFIT & NOT IN THE RATE OF PROFIT. THUS, WHEN THE AMOUNT OF PROFIT DEC LARED BY THE ASSESSEE IS BETTER AS COMPARED TO THE RESULTS DECLA RED IN EARLIER YEARS, APPLICATION OF G.P. RATE OF 2.34% I.E. AVERAGE OF L AST TWO PRECEDING YEARS AS AGAINST G.P. RATE OF 1.90% DECLARED BY THE ASSESSEE IS UNWARRANTED. 5. THE ANOTHER REASON FOR APPLYING THE AVERAGE G .P. RATE OF THE LAST TWO YEARS IS THAT ASSESSEE HAS AGREED T O THE SAME AS PER ORDER SHEET ENTRY DATED 28.12.2010. FROM THE ORDER SHEET ENTRY DATED 28.12.2010 , IT CAN BE NOTED THAT THE ASSESSEE AGREED FOR THE ASSESSMENT BY APPLYING AVERAGE G.P. RATE TO AVOID L ITIGATION AND TO BUY PEACE OF MIND SUBJECT TO THE CONDITION THAT NO PENALTY PROCEEDINGS BE INITIATED. HOWEVER, THE AO HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). THEREFORE, WHEN AO HAS NOT ACCEPTED THE CONDITION ON WHICH ASSESSEE AGREED FOR APPLICATION OF AVERAGE G. P. RATE, TRADING ADDITION MADE BY THE AO AND CONFIRMED BY CIT(A) ONL Y ON THE BASIS OF OFFER OF THE ASSESSEE IS NOT JUSTIFIED. ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 9 THE LD. AR OF THE ASSESSEE RELIED ON FOLLOWING CAS E LAWS:- (I) MALANI RAM JAGANNATH VS. ACIT , 316 ITR 120 ( RAJ.) (II) CIT VS. SMT. POONAM RANI, 41 DTR 194 (DEL) 2 010 (III) CIT VS. GOTAN LIME KHANIJ UDYOG, 256 ITR 243 (RAJ.) THE LD. AR OF THE ASSESSEE THUS PRAYED FOR THAT THE BOOKS OF ACCOUNT BE DIRECTED TO BE ACCEPTED AND TRADING ADDITION OF RS. 9,76,3412/- CONFIRMED BY THE LD. CIT(A) BE DELETED. 2.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSIO NS OF THE ASSESSEE. FIRST OF ALL, IT IS NOTED THAT GROSS PROFIT RATE DU RING THE YEAR HAS FALLEN TO 1.90% AS AGAINST 2.29% IN A.Y. 2007-08 AND 2.41% I N ASSESSMENT YEAR 2006-07. IN ORDER TO EXAMINE THE REASONS FOR FALL I N GROSS PROFIT RATE, THE AO HAS CALLED FOR THE BOOKS OF ACCOUNTS AND AFTER EXAMINING THE BOOKS OF ACCOUNTS, HE HAS REJECTED THE BOOKS OF ACCOUNTS AND IN THAT REGARD HAD MADE CERTAIN OBSERVATIONS WHICH HAVE BEEN REPRODUCE D IN PARA 1 ABOVE . FIRSTLY, IT IS NOTED THAT WHILE REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE SHOW CAUSE WAS ISSUED TO THE ASSESSE E ON 28-12-2010. THEREAFTER, THERE IS ENTRY IN THE ORDER SHEET BY TH E ASSESSEE ON THE SAME DATE AND THE ASSESSMENT ORDER HAS ALSO BEEN PASSED ON THE SAME DATE ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 10 WHICH SHOWS THAT THE MATTER HAS NOT BEEN GIVEN CONS IDERED THOUGHT BY THE AO. IT IS A CLEAR CASE OF LACK OF OPPORTUNITY TO T HE ASSESSEE TO SUBMIT ITS SUBMISSIONS AND RELEVANT DOCUMENTS. SECONDLY, IN TE RMS OF THE OBSERVATIONS OF THE AO AS WELL AS SUBMISSIONS OF TH E ASSESSEE, IT IS NOTED THAT THE AO WANTED TO EXAMINE THE FALL IN GROSS PR OFIT RATE I.E. QUANTITYWISE AS WELL AS QUALITYWISE AND THE CORRES PONDING MARGINS IN THE SALES EFFECTED DURING THE YEAR AS WELL AS CORRESPON DING PURCHASES MADE DURING THE YEAR BESIDES OPENING STOCK. THE ASSESSEE HAS MENTIONED THAT IT HAS MAINTAINED DAY TO DAY BOOKS OF ACCOUNT WHICH AR E DULY SUPPORTED BY BILLS AND VOUCHERS. FURTHER MONTHWISE QUANTITATIVE DETAILS ARE ALSO MAINTAINED. IT IS, THEREFORE, IMPORTANT THAT THE AO SHOULD EXAMINE BOTH QUANTITATIVE AS WELL AS QUALITATIVE DETAILS AS MAIN TAINED BY THE ASSESSEE IN ORDER TO DETERMINE THE REASONS FOR FALL IN GROSS PR OFIT RATE AS COMPARED TO PAST YEARS. THIRDLY, THE ASSESSEE HAS MENTIONED THA T THE GROSS PROFIT HAS INCREASED IN ABSOLUTE TERMS FROM RS. 18,26,910/- ( A.Y. 2007-08) TO RS. 41,78,691/- (A.Y. 2008-09) BUT THERE IS ONLY MARGI NAL DECLINE IN GROSS PROFIT RATE I.E. 0.39% ON ACCOUNT OF INCREASE IN T URNOVER. THE ASSESSEE HAS FURTHER STATED THAT HE WAS INTERESTED IN VOLUME OF THE PROFIT AND NOT IN RATE OF PROFIT. TO OUR MIND, THIS JUSTIFICATION ON STAND ALONE BASIS CANNOT STAND THE TEST OF JUDICIARY WITHOUT ANY CORROBORATIVE EVI DENCE. WHAT IS REALLY ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 11 REQUIRED TO BE DEMONSTRATED BY THE ASSESSEE AS A PR UDENT BUSINESSMAN IS THAT WHAT ARE THE KEY BUSINESS CIRCUMSTANCES IN CON TEXT OF THE PREVAILING MARKET CONDITIONS WHICH LED TO THE FALL IN GROSS PR OFIT RATE. IN THE LIGHT OF ABOVE DISCUSSIONS AND ESPECIALLY THE FACT THAT THE ASSESSEE HAS BEEN DENIED A REASONABLE OPPORTUNITY OF BEING HEARD, THE MATER IS SET ASIDE TO THE FILE OF THE AO TO DETERMINE AFRESH WHETHER THE ASSESSEE HAS DECLARED CORRECT GROSS PROFIT OR NOT. THUS GROUND NO. 1 AND 1.1 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3.1 NOW WE TAKE UP GROUND NO. 2 AND 2.1 OF THE ASSE SSEE AS MENTIONED HEREUNDER 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE / ADDITION OF RS. 5,39,791/ - OUT OF FOLLOWING. CAR & CONVEYANCE EXPENSES RS. 21,952/- WAGES EXPENSES RS. 1,57,952/- SHOP EXPENSES RS. 15,877/- MOBILE & TELEPHONE EXPENSES RS. 19,660/- TRANSPORTATION EXPENSES RS. 28,919/- HOUSE HOLD EXPENSES RS. 1,06,815/- PENALTY EXPENSES RS. 1,78,540/- CASH CREDITORS RS. 39,400/- COMMISSION EXPENSES RS. 22,000/- 2.1 THE LD. CIT(A) HAS FURTHER ERRED ON FACTS AND I N LAW IN NOT ALLOWING THE SET OFF OF TRADING ADDITION OF RS. 9,76,312/- CONFIRMED BY HIM AGAINST THE DISALLOWANC E / ADDITION IN RESPECT OF TRANSPORTATION EXPENSES, HO USE HOLD ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 12 EXPENSES AND CASH CREDITOR MADE BY HIM RESULTING IN TO DOUBLE ADDITION. 3.2 IN BOTH THE ABOVE GROUNDS, THE FACTS AND SUBMIS SIONS AS ENUMERATED BY THE ASSESSEE THROUGH ITS WRITTEN SUBM ISSION ARE AS UNDER:- DISALLOWANCE OUT OF CAR & CONVEYANCE EXPENSES AND SHOP EXPENSES 20% OF ABOVE EXPENSES WERE DISALLOWED FOR THE REASO N THAT EXPENSES WERE PAID IN CASH, ON SELF- MADE VOUCHERS, NOT FULL Y VERIFIABLE AND CANNOT BE SAID TO BE WHOLLY FOR BUSINESS PURPOSE IGNORING THAT NATURE OF SUCH EXPENSES ARE SUCH THAT THERE CANNOT BE A PAKKA BILL FOR THESE EXPENSES. THE EXPENSES ARE REASONABLE CONSIDERING THE TURNOVE R. OTHERWISE THE DISALLOWANCE IS EXCESSIVE AND BE RESTRICTED TO 10% OF THE EXPENSES LOOKING TO THE SIZE AND VOLUME OF THE BUSINESS VIS- -VIS THE EXPENDITURE INCURRED LAST YEAR. DISALLOWANCE OUT OF WAGES EXPENSES DISALLOWANCE IS MADE OUT OF OUTSTANDING LIABILITY O F RS.1,57,592/- AS ON 31.03.08 FOR THE REASON THAT WHEN THE ASSESSEE HAS AVAILABILITY OF CASH BALANCE THAN THERE IS NO REASON TO KEEP THE PAYMENT OUTSTANDING. FROM THE DETAILS OF THE SALARY AND WAGES EXPENSES, IT CAN BE NOTED THAT THE OUTSTANDING IS PARTLY FOR THE MONTH OF FEBRUARY, 20 08 AND MARCH, 2008. ONLY BECAUSE ASSESSEE HAS THE AVAILABILITY OF CASH, CANNOT BE A REASON FOR DISALLOWANCE OF SALARY/WAGES PAYABLE. IT IS NOT THE CASE OF THE AO THAT EXPENSES ARE NON- GENUINE OR INFLATED. FURTHER, THE WAGES PAYABLE OF RS.83,912/- IS A PART OF TRADING ACCOUNT. THEREFOR E, ONCE INCOME IS ESTIMATED BY APPLICATION OF THE G.P RATE, SEPARATE DISALLOWANCE OF WAGES PAYABLE CANNOT BE MADE. HENCE, DISALLOWANCE MADE BY AO AND CONFIRMED BY CIT(A) WITHOUT CONSIDERING THESE FACTU AL ASPECTS BE DELETED. DISALLOWANCE OUT OF MOBILE AND TELEPHONE EXPENSES 20% OF THE EXPENSES HAS BEEN DISALLOWED FOR PERSONA L USE WHICH IS EXCESSIVE CONSIDERING THE VOLUME OF THE BUSINESS AN D THE SAME BE RESTRICTED TO 10%. ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 13 DISALLOWANCE OUT OF TRANSPORTATION EXPENSES 20% OF THE EXPENSES IS DISALLOWED FOR THE REASON TH AT THE EXPENSES ARE INCURRED ON SELF- MADE VOUCHERS. FROM THE DETAILS O F EXPENSES, IT CAN BE NOTED THAT ALL EXPENSES ARE SUPPORTED BY THE GR/ RE CEIPTS/ RECEIPT ISSUED BY WESTERN RAILWAY. FURTHER, THESE EXPENSES ARE PAR T OF TRADING ACCOUNT. THEREFORE, ONCE INCOME IS ESTIMATED BY APPLICATION OF THE G.P RATE, SEPARATE DISALLOWANCE OF TRANSPORTATION EXPENSES CA NNOT BE MADE. HENCE, DISALLOWANCE MADE BY AO AND CONFIRMED BY CIT(A) WIT HOUT CONSIDERING THESE FACTUAL ASPECTS BE DELETED. ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES THE AO OBSERVED THAT ASSESSEE SUBMITTED THE DETAILS OF HOUSEHOLD WITHDRAWALS VIDE REPLY DATED 10.09.10 IN WHICH HE HAS SHOWN HOUSEHOLD WITHDRAWALS OF RS.1,37,900/- IN HIS NAME AND RS.42, 000/- IN THE NAME OF HIS WIFE. THEREAFTER, VIDE LETTER DATED 24.09.2010, HOUSEHOLD EXPENSES IS CLAIMED AT RS.1,20,000/- IN HIS NAME AND RS.1,46,95 1/- IN THE NAME OF HIS WIFE. THE AO ACCEPTED THE HOUSEHOLD EXPENSES IN THE HANDS OF THE ASSESSEE AT RS.1,20,000/- AND IN THE HANDS OF THE W IFE AT RS.58,000/- AND THUS MADE ADDITION OF RS.1,06,815/- (17,900+88,915) FOR THE REASON THAT IN EARLIER DETAIL ASSESSEE CLAIMED HOUSEHOLD EXPENS ES HIGHER BY RS,17,900/- AND FROM THE VERIFICATION OF THE RETURN OF THE ASSESSEE IT IS FOUND THAT ASSESSEE HAS NOT DECLARED ANY RENTAL INC OME OF RS.88,951/-. IT IS SUBMITTED THAT IN EARLIER LETTER ASSESSEE HAS INCORRECTLY SHOWN THE HOUSEHOLD WITHDRAWALS IN HIS HANDS AT RS.1,37,900/- WHEREAS THE ACTUAL WITHDRAWALS WERE RS.1,20,000/-. THEREFORE, THIS DIF FERENCE CANNOT BE ADDED. FURTHER, IN EARLIER LETTER ASSESSEE CLAIMED HOUSEHOLD WITHDRAWAL IN THE HANDS OF HIS WIFE AT RS.42,000/- WHEREAS THE AC TUAL WITHDRAWALS IN HER HANDS WERE RS.1,46,951/-. THE AO HAS ACCEPTED THE H OUSEHOLD WITHDRAWALS IN THE HANDS OF ASSESSEES WIFE AT RS.5 8,000/- BUT INCORRECTLY IGNORED THE WITHDRAWAL OF RS.88,951/- IN RESPECT OF WITHDRAWAL OUT OF PERSONAL/RENTAL INCOME BY REFERRING TO THE RETURN O F THE ASSESSEE INSTEAD OF ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 14 REFERRING TO THE RETURN OF THE ASSESSEES WIFE. FRO M THE CAPITAL ACCOUNT OF ASSESSEES WIFE , THE WITHDRAWALS OF RS.1,46,951/- IS VERIFIABLE WH ICH IS PARTLY OUT OF RENTAL INCOME OF RS.72,000/- AND PARTLY OUT OF PERSONAL WITHDRAWAL AND WITHDRAWAL FROM THE FIRM IN WHICH SH E IS PARTNER/PROPRIETOR. IN THESE FATS THE ADDITION FOR HOUSEHOLD WITHDRAWALS MADE BY AO AND CONFIRMED BY CIT(A) BE DELETED. DISALLOWANCE OF PENALTY EXPENSES THE AO DISALLOWED THE RESTORATION CHARGES OF RS.1,1 7,540/- PAID TO RIICO IGNORING THAT THE SAME IS NOT CLAIMED AS EXPENDITUR E IN M/S BAJAJ INDUSTRIES, KOTA BUT IS DEBITED TO THE CAPITAL ACCO UNT OF THE ASSESSEE . THEREFORE, THE DISALLOWANCE MADE BY THE AO AND CONF IRMED BY CIT(A) WITHOUT LOOKING TO THE FACTS IS INCORRECT AND THE S AME BE DELETED. ADDITION OF RS.39,400/- U/S 68 AO OBSERVED THAT ASSESSEE HAS SHOWN LOAN OF RS.19,9 00/- FROM SH. RATAN CHAND AND RS.19,500/- FROM RASHMI JAIN TO WHOM SUMM ONS U/S 131 WERE ISSUED BUT IN SPITE OF SEEKING DATES TIME AND AGAIN THEY DID NOT APPEAR AND ASSESSEE SHOWN HIS INABILITY TO PRODUCE THEM. HE THEREFORE, MADE THE ADDITION. IT IS SUBMITTED THAT IN RESPECT OF THE ABOVE TWO CR EDITORS ASSESSEE VIDE LETTER DATED 24.09.2010 FILED THE CONFIRMATION . T HEREAFTER, THE COPY OF THE INCOME TAX RETURN WAS FILED . BOTH THE CREDITOR S ARE ASSESSED TO TAX. THE AO HAS ACCEPTED THE AMOUNT RECEIVED BY THEM FRO M CHEQUE BUT HAS ADDED THE AMOUNT RECEIVED IN CASH. FURTHER, WHEN TH ESE PERSONS HAVE CONFIRMED GIVING LOAN TO THE ASSESSEE, ARE ASSESSED TO INCOME TAX AND SUMMONS HAVE BEEN SERVED ON THEM, ASSESSEE HAS DISC HARGED HIS BURDEN OF PROOF AND THEREFORE, THE ADDITION MADE BY AO AND CONFIRMED BY CIT(A) IS UNJUSTIFIED. THIS APART WHEN TRADING ADDI TION IS MADE, ADDITION U/S 68 SHOULD NOT HAVE BEEN MADE AS PER THE RATIO L AID DOWN IN THE FOLLOWING CASES:- CIT VS. TYARYAMAL BAL CHAND 165 ITR 453 (RAJ.) (HC) ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 15 CIT VS. G.K CONTRACTOR 19 DTR 305 (RAJ.) CIT VS. KSM GURUSWAMY NADAR & SONS 149 ITR 127 (MAD .) ANANTHARAM VEERASINGHAIAH & CO. VS. CIT 123 ITR 457 (SC) DISALLOWANCE OUT OF COMMISSION EXPENSES. AO DISALLOWED THE COMMISSION PAYMENT U/S 40(A)(IA) FOR THE REASON THAT TAX IS NOT DEDUCTED AT SOURCE. FROM THE COPY OF BIL L, IT CAN BE NOTED THAT COMMISSION WAS PAID DURING THE YEAR ITSELF AND NO A MOUNT IS OUTSTANDING AT THE END OF THE YEAR. THEREFORE, NO DISALLOWANCE U/S 40(A)(IA) IS WARRANTED IN VIEW OF THE DECISION OF HON'BLE ALLAH ABAD HIGH COURT IN CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD. W HERE THE DECISION OF SPECIAL BENCH OF ITAT IN CASE OF MERILYN SHIPPING A ND TRANSPORT LTD. 136 ITD 23 IS APPROVED AND THE SLP OF THE DEPARTMEN T AGAISNT THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IS DISMIS SED BY HON'BLE SUPREME COURT . HON'BLE ITAT IN CASE OF GIRDHARI L AL BAGROTIA IN ITA NO. 757/JP/12 HAS HELD ALSO HELD NO DISALLOWANCE U/ S 40(A)(IA) IS TO BE MADE IF THE AMOUNT IS NOT OUTSTANDING AT THE END OF THE YEAR. 3.3 THE LD. CIT(A) HAS CONFIRMED ALL THE ABOVE DISA LLOWANCES AS MADE BY THE AO RELATING TO GROUND NO. 2 AND 2.1 OF THE A SSESSEE. 3.4 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES. 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSIO N. 3.5.1 REGARDING DISALLOWANCE OF CAR & CONVEYANCE AN D SHOP EXPENSES AMOUNTING TO RS. 21,952/-, DISALLOWANCE OF MOBILE A ND TELEPHONE EXPENSES AMOUNTING TO RS. 19,660/-, DISALLOWANCE OF TRANSPORTATION EXPENSES AMOUNTING TO RS. 28,919/-, IT IS NOTED THA T THESE EXPENSES PERTAIN TO 20% OF TOTAL EXPENSES WHICH HAVE BEEN IN CURRED BY THE ASSESSEE. FROM THE PERUSAL OF THE ORDER OF THE AO, WE DO NOT FIND ANY ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 16 SPECIFIC FINDING WHICH HAS BEEN GIVEN WHILE DISALLO WING THESE EXPENSES. IT IS THUS AN ADHOC DISALLOWANCE MADE BY THE AO WHI CH IS NOT JUSTIFIED. THUS WE DELETE THE ADHOC DISALLOWANCE OF EXPENSES O F 20% ON THE ABOVE HEADS AND DO NOT SUSTAIN THE ORDER OF THE LD. CIT(A ) ON THESE ISSUES. 3.5.2 AS REGARDS DISALLOWANCE OF SALARY AND WAGES E XPENSES AMOUNTING TO RS. 1,57,592/-,IT IS CLAIMED BY THE ASSESSEE TH AT PART OF THE WAGES EXPENSES WERE SHOWN UNDER DIRECT EXPENSES WHICH HAV E ALREADY SUFFERED DISALLOWANCE BY APPLICATION OF ADHOC GROSS PROFIT R ATE BY THE AO. THE AO IS DIRECTED TO VERIFY THE SAME AND IN LIGHT OF THE FINDINGS GIVEN IN CONTEXT OF GROUND NO. 1 AND 1.2 , THIS ISSUE IS SET ASIDE T O THE FILE OF THE AO. 3.5.3 AS REGARDS ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSES, THE ASSESSEE HAS SUBMITTED DETAILED SUBMISSION IN RESPE CT OF HOUSE HOLD WITHDRAWAL IN HIS NAME AS WELL AS IN THE NAME OF HI S WIFE. THE AO IS DIRECTED TO VERIFY THE SAME AND ALLOW THE SAME AFTE R DUE VERIFICATION. 3.5.4 REGARDING DISALLOWANCE OF PENALTY EXPENSES, T HE ASSESSEE HAS SUBMITTED THAT THE RESTORATION CHARGES OF RS. 1,17, 540/- HAVE BEEN DEBITED TO THE ACCOUNT OF THE ASSESSEE AND HAS NOT BEEN CLA IMED AS EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. THE AO IS THUS DIRECTE D TO VERIFY THE SAME AND IF THE CLAIM OF THE ASSESSEE IS SUPPORTED BY TH E TREATMENT DONE IN THE ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 17 FINANCIAL STATEMENT AS CLAIMED BY THE ASSESSEE, THE SAME SHOULD BE ALLOWED. 3.5.5 REGARDING ADDITION OF RS. 39,400/- U/S 68 OF THE ACT, IT IS NOTED THAT THE ASSESSEE HAS SUBMITTED THE CONFIRMATION FROM SH RI RATAN CHAND AND SMT. RASHMI JAIN DURING THE COURSE OF ASSESSMENT PR OCEEDINGS. FURTHER THE INCOME TAX RETURNS WERE ALSO FILED AND BOTH THE CREDITORS ARE ASSESSED TO TAX. BOTH THESE PERSONS HAVE CONFIRMED THE LOAN TRANSACTIONS MADE WITH THE ASSESSEE AND THE TRANSACTIONS ARE DUL Y VERIFIABLE AND THE CREDITORS HAVE BEEN DULY IDENTIFIED. THUS IN VIEW O F THESE FACTS, THE ADDITION MADE U/S 68 IS DELETED. HENCE, THE ORDER O F THE LD. CIT(A) IS NOT SUSTAINABLE ON THIS POINT AND ADDITION SUSTAINED BY THE LD. CIT(A) IS DELETED. 3.5.6 AS REGARDS THE COMMISSION EXPENSES AMOUNTING TO RS. 22,000/-, THE ASSESSEE HAS NOT DEDUCTED THE TDS ON THE SAID A MOUNT THOUGH NO JUSTIFICATION HAS BEEN GIVEN TO THIS EFFECT. THE AS SESSEE HAS TAKEN THE LEGAL PLEA THAT IN THE LIGHT OF DECISION OF THE JAIPUR BE NCH IN THE CASE OF ACIT VS GIRDHARI LAL BAGROTI IN ITA NO. 757/JP/2012, NO DISALLOWANCE U/S 40(A)(IA) IS TO BE MADE IF THE AMOUNT IS NOT OUTSTA NDING AT THE END OF THE YEAR. THUS IN THE LIGHT OF DECISION TAKEN EARLIER B Y THIS BENCH IN CASE OF ITA NO. 428/JP/2013 SHRI PREM CHAND JAIN VS. ADDL. CIT, RANGE-2, JAIPUR 18 ACIT VS GIRDHARI LAL BARGOTI (SUPRA) WE DELETE THE ADDITION. HENCE, THE ORDER OF THE LD. CIT(A) IS NOT SUSTAINABLE ON THIS ISSUE. 4 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 21/09/20 15. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21 ST SEPT 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PREM CHAND JAIN, KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ADDL. CIT, RANGE-2, KOTA 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.486/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR