MANOJ KUMAR JOHARI, Jaipur V. ACIT, Sikar

ITA 495/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1987 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 09-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: VIKAS RAJVANS HI
• Keywords: Rejection of books of accounts; Additional evidence; Corroborative evidences

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 495/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-2013 SH. MANOJ KUMAR JOHARI, PROP. O F THE ART PALACE, ZEE BHAWAN, SUBHASH CHOWK, RAMGARH- SHEKHAWATI, SIKAR. CUKE VS. THE ACIT, CIRCLE, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADWPT8870A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 487/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-2013 THE ACIT, CIRCLE, SIKAR. CUKE VS. SH. MANOJ KUMAR JOHARI, PROP. OF THE ART PALACE, ZEE BHAWAN, SUBHASH CHOWK, RAMGARH- SHEKHAWATI, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADWPT8870A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VIKAS RAJVANSHI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 12/07/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 27/07/2017 VKNS'K@ ORDER ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 2 PER: VIKRAM SINGH YADAV, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LD. CIT (A)-III, JAIPUR DATED 26.02.2016 FOR A.Y. 2012-13 WHEREIN THE RESPECTIVE GROUNDS OF THE APPEA L ARE AS UNDER:- 495/JP/16 (GROUND OF ASSESSEES APPEAL): GROUND NO. 1: THE LD. A.O. AND CIT(A-III), JAIPUR HAS ERRED IN LAW AS WELL AS IN FACT IN WRONGLY REJECTING THE BOO KS OF ACCOUNTS U/S 145(3) OF THE INCOME TAX ACT, 1961 AND APPLIED 15% GP RATE (LD. AO ASSESSED @ 17.20% ON THE BASIS OF 7 YEARS O LD IRRELEVANT GP RATE) AGAINST THE DECLARED GENUINE GP RATE OF 13 .19% WITHOUT COMPARING THE COMPOSITION OF TRADING ACCOUNT AND PR ESENT CONDITIONS OF BUSINESS OF THE ASSESSEE AND IGNORED THE IMMEDIATE PAST HISTORY. GROUND NO. 2: THE LD. A.O. AND CIT(A)-III, JAIPUR H AS ERRED IN LAW AS WELL AS IN FACT IN ARBITRARILY DISALLOWING A ND SUSTAINING OF RS. 1,31,036/- U/S 40(A)(IA) ON ACCOUNT OF NON-DEDU CTION OF TDS PAYMENT MADE TO EXPORT PROMOTION COUNCIL FOR HANDIC RAFT WORKING UNDER MINISTRY OF COMMERCE AND INDUSTRY UND ER GOVERNMENT OF INDIA FOR EXPORT TRADE FAIR ORGANIZED BY GOVERNMENT OF INDIA NOT LIABLE FOR TDS U/S 196. GROUND NO. 3: THE LD. A.O. AND CIT(A)-III, JAIPUR H AS ERRED IN LAW AS WELL AS IN FACT IN ARBITRARILY ADDING UP AND SUSTAINING THE UNEXPLAINED CASH DEPOSIT U/S 69A OF RS. 37,34,500 I N BANK BY THE ASSESSEE WHEREAS THE ASSESSEE HAS DULY DISCLOSED SU CH AMOUNT IN HIS PERSONAL BALANCE SHEET NOT IN BUSINESS BALANCE SHEET. EVEN PERSONAL CASH BOOK WITH SUPPORTING EVIDENCE WAS PRO VIDED BEFORE THEM. LD. CIT(A-III) WRONGLY CONSIDERED IT A S ADDITIONAL EVIDENCE UNDER RULE 46A WHEREAS THESE DETAILS WERE AVAILABLE AT THE TIME OF ASSESSMENT AND DULY SUBMITTED TO LD. CI T(A-III). ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 3 487/JP/16 (GROUND OF REVENUES APPEAL): 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN ALLOWING THE RELIEF OF RS. 34,55,489/- WITHOUT CONSIDERING THE FINDING OF THE AO IN THE ASSESSMENT ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN REDUCING GP RATE FROM 17.20 TO 15% EVE N THOUGH SHE HAS CONFIRMED THE ACTION OF INVOCATION OF SECTI ON 145(3) OF THE ACT, 1961. 2. FIRSTLY REGARDING GROUND NO. 1 OF THE ASSESSEE A ND BOTH THE GROUNDS TAKEN BY THE REVENUE, BRIEFLY THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO AFTER REVIEW OF THE ASSESSEES BOOKS OF ACCOUNTS ISSUED A SHOW CAUS E TO THE ASSESSEE REFERRING TO THE FOLLOWING OBSERVATIONS OF THE AUDI TORS WHO HAVE AUDITED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AS UN DER:- (I) VALUATION OF INVENTORY AT COST WHICH IS NOT IN ACCORDANCE WITH ACCOUNTING STANDARD (AS-2) ISSUED BY ICAI( IMPACT O N PROFIT NOT ASCERTAINED). (II) STOCK AND CONSUMPTION RECORD HAVE NOT BEEN MAI NTAINED. (III) REGARDING ACCOUNTING FOREIGN CURRENCY TRANSAC TION WHICH IS NOT IN ACCORDANCE WITH ACCOUNTING STANDARD (AS-11) (IMPACT ON PROFIT NOT ASCERTAINED). (IV) REGARDING ACCOUNTING CERTAIN INCOME AND EXPENS ES ON YEARLY BASIS (IMPACT ON PROFIT NOT ASCERTAINED. 3. IN RESPONSE TO THE SHOW-CAUSE, THE ASSESSEE VIDE ITS LETTER DATED 12.03.2015 SUBMITTED AS UNDER: ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 4 VALUATION OF INVENTORY, STOCK AND CONSUMPTION RECOR D:- (A) AS USUAL, THE ASSESSEE VALUES ITS STOCK ON THE DATE OF CLOSURE OF THE YEAR ON COST PRICE. AS ALREADY SUBMITTED BEFORE YOU R PREDECESSORS AT THE TIME OF FINALIZATION THE OLD ASSESSMENTS THE PR OCEDURE TO VALUE THE STOCK IS DURING LAST WEEK OF CLOSURE OF ACCOUNTING YEAR, SEPARATE INVENTORY OF VARIOUS STOCK IN HAND ARE PREPARED BY THE STAFF OF THE ASSESSEE UNDER SUPERVISION AND THE STOCK IS VALUED ON COST PRICE. (B) FURTHER IN THIS LINE OF TRADE OF ASSESSEE, IT IS NOT POSSIBLE TO MAINTAIN THE QUANTITY RECORDS ON DAILY BASIS AS REQ UIRED BY ACCOUNTING STANDARD (AS-2). (C) FURTHER THE ASSESSEE IS AN EXPORTER AND DOES NO T AFFECT ANY SALE IN INDIA. UNDER SUCH CIRCUMSTANCES, ALL THE SALES ARE COMPULSORILY ACCOUNTED FOR AND SIMILARLY REMITTED THROUGH BANKIN G CHANNEL ONLY. (D) HOWEVER THE ASSESSEE HAS PRODUCED HIS BOOKS OF ACCOUNTS BEFORE YOUR HONOR AND TODAY ALSO PRODUCING ITS BOOKS OF AC COUNTS FOR YOUR KIND VERIFICATION. YOUR HONORS MAY SEE THAT BOOKS OF ACC OUNTS ARE REGULARLY MAINTAINED AND ALSO ALL THE TRANSACTION ARE ACCOUNT ED FOR AND TRUE PROFIT AND LOSS CAN BE DETERMINED THEREBY. ACCOUNTING OF FOREIGN CURRENCY:- IN THIS RESPECT IT IS SUBMITTED THAT THOUGH THE AUD ITOR, HAS OBSERVED THAT ACCOUNTING OF FOREIGN CURRENCY IS NOT ACCORDIN G TO ACCOUNTING STANDARD (AS-11) BUT THE AUDITOR HAS NOT TAKEN PAI NS TO DETERMINE OR CALCULATE ITS EFFECT ON PROFIT OF THE ASSESSEE. IN FECT, IF YOUR HONORS SEES PROFIT AND LOSS ACCOUNT, IT IS CLEAR THAT ASSESSEE HAS SHOWN AN INCOME OF ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 5 RS. 9,95,761.95 ON ACCOUNT OF INCREASE IN THE RATE OF FOREIGN EXCHANGE. INCREASE IN FOREIGN CURRENCY IS DULY ACCOUNTED FOR AND IS CREDITED TO PROFIT AND LOSS ACCOUNT. I AM ENCLOSING HEREWITH A COPY OF MARGIN IN CURRENCY ACCOUNT WHICH CLARIFIES THIS MATTER. ACCOUNTING OF CERTAIN INCOME AND EXPENSES ON YEARLY BASIS:- IN THIS OBSERVATION/OBJECTION ALSO, THE AUDITOR HAS NOT TRIED AS TO WHICH ARE THE EXPENSE AND INCOME ACCOUNTED FOR ON YEARLY BASIS AND HOW THIS HAD EFFECTED THE PROFITS OF THE ASSESSEE. THE EFFEC T OF THIS SYSTEM HAS NOT BEEN CALCULATED. THE ASSESSEE IS PRODUCING BOOK S OF ACCOUNTS BEFORE YOUR HONOUR FOR THIS VERIFICATION ALSO. 4. THE ASSESSING OFFICER DIDNT FIND THE SUBMISSION OF THE ASSESSEE ACCEPTABLE. THE RELEVANT FINDINGS OF THE AO ARE CO NTAINED IN PARA 3.3 AND 3.4 OF HIS ORDER WHICH ARE REPRODUCED ARE AS UN DER:- 3.3 NON-MAINTENANCE OF RECORDS OF QUANTITATIVE DET AILS RENDERS THE ACCOUNTS OF ASSESSEE INCOMPLETE. PREPARATION OF THE INVENTORY AT THE END OF YEAR BUT NOT KEEPING IT ON RECORD AND NOT PRODUCING SUCH INVENTORY FOR SCRUTINY CAN ONLY LEAD TO THE INFERENCE THAT ACCOUNTS ARE NOT CORRECT. QUANTITATI VE TALLY OF ITEMS TRADED AND MANUFACTURED BY ASSESSEE IS NOT ONLY POS SIBLE BUT ALSO THE REQUIREMENT OF PROPER ACCOUNTING SYSTEM. T ODAY WHEN BOOKS ARE MAINTAINED ON COMPUTER AND ADVANCED SOFTW ARE LIKE TALLY ARE AVAILABLE AND USED, MAINTENANCE OF QUANTI TATIVE DETAILS IS VERY EASY AND CONVENIENT. ASSESSEES FAILURE TO PRO VIDE THE QUANTITATIVE DETAILS IS THUS DELIBERATE. ASSESSEE I S NOT MAINTAINING DAY TO DAY STOCK REGISTER. HE HAS NOT MAINTAINED IN VENTORY OF CLOSING STOCK. ASSESSEE DEALS IN MANUFACTURE/TRADIN G OF WOODEN FURNITURE ITEMS. PURCHASES OF WOOD ARE IN VOLUME I. E. CFT/M CUBE MEASUREMENT BUT SALES ARE IN NOS. OF VARIOUS ITEMS. [ADOPTION OF ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 6 DIFFERENT STANDARDS FOR RECEIPTS AND PRODUCTION IN STOCK, ACCOUNTS CAN JUSTIFY REJECTION OF ACCOUNTS:- IF THE STOCK RE CEIVED ARE SHOWN IN THE BOOKS BY ONE STANDARD AND GOODS PRODUCED FRO M THOSE STOCKS ARE SHOWN BY ANOTHER STANDARD IT IS QUITE CL EAR THAT PROFITS CANNOT BE CORRECTLY DEDUCTED. IN SUCH CASES THE ASS ESSING OFFICER WOULD BE JUSTIFIED IN REJECTING THE METHOD AND IN E STIMATING THE INCOME- HOWRAH TRADING CO (P) LTD. V.CIT(1968) 67 I TR 582 (CAL).] THERE IS NO RECORD OF YIELD, SHORTAGE. SUCH BOOKS OF ACCOUNT AND SUCH SYSTEM OF ACCOUNTING CANNOT BE CON SIDERED SO SACROSANCT THAT TRADING RESULT CANNOT BE DISTURBED WHEN THE CIRCUMSTANCES SUGGEST OTHERWISE. ASSESSEE HAS DONE TRADING BUSINESS WITH PURCHASES OF MORE THAN RS. 9.62 CRORE S BUT EVEN IN RESPECT OF SUCH TRADING BUSINESS QUANTITATIVE DETAI LS OR INVENTORY OF STOCK IS NOT PRODUCED. 3.4 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . MCMILLIAN & COMPANY [1958] 33 ITR 182(SC) HAS HELD THAT ASSESSI NG OFFICER IS NOT BOUND BY THE DECLARED PROFITS EVEN WHEN HE A CCEPTS THE ASSESSEES METHOD OF ACCOUNTING. THE HONBLE SUPREM E COURT IN ANOTHER CASE OF CIT VS. BRITISH PAINTS INDIA LTD.[1 991] 188 ITR 44(SC) HAS HELD THAT ITO IS NOT BOUND TO ACCEPT THE SYSTEM OF ACCOUNTING AND IT IS THE DUTY OF THE AO TO CONSIDER WHETHER OR NOT THE BOOKS DISCLOSED THE TRUE STATE OF ACCOUNTS AND THE CORRECT INCOME. IT IS INCORRECT TO SAY THAT ASSESSING OFFIC ER IS BOUND TO ACCEPT THE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE, THE CORRECTNESS OF WHICH HAD NOT BEEN QUE STIONED IN THE PAST. 5. FURTHER THE ASSESSING OFFICER OBSERVED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED IN A.Y. 2008-09 ON SI MILAR GROUNDS WHICH HAS SINCE BEEN AFFIRMED BY THE TRIBUNAL. FOLLOWING THE SAME, HE REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LD. AO WHO HAS CONFIRMED THE REJECTION OF BOOKS OF ACCOUNTS. ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 7 6. FURTHER ASSESSING OFFICER AFTER REJECTION OF BOO KS OF ACCOUNTS HAS ESTIMATED G.P. @17.20% AS AGAINST G.P. @13.19% DECL ARED BY THE ASSESSEE AND MADE AN ADDITION OF RS. 62,93,817/- TO THE DECLARED INCOME OF THE ASSESSEE. WHILE DOING SO, THE ASSESS ING OFFICER FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2008-09 WHEREIN THE TRIBUNAL CONFIRMED THE G.P. RATE OF 17. 20% AS AGAINST 14.11% DECLARED BY THE ASSESSEE. THE LD. CIT(A) NOT ED THAT THE PAST HISTORY OF THE ASSESSEE SHOWS THAT G.P. RATE DECLAR ED BY THE ASSESSEE DURING THE YEAR IS BETTER THAN LAST 5 YEARS EXCEPT IN A.Y. 2008-09 WHERE THE TRIBUNAL UPHELD THAT THE G.P. RATE OF 17.20% AN D THEREAFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE IN TERMS OF INCREASED OF COST OF RAW MATERIAL VIZ-A-VIZ IN A SALE PRICE OF THE FI NISHED GOODS, SHE APPLIED G.P. RATE OF 15% AS AGAINST 17.20% APPLIED BY THE ASSESSING OFFICER RESULTING IN SUSTENANCE OF TRADING ADDITIO N OF RS. 28,38,328/- AND RELIEF OF RS. 34,55,489/-. AGAINST THE SAID OR DER OF THE LD. CIT(A), BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING, LD. AR SUBMITTED T HAT THE G.P. RATE DECLARED BY THE ASSESSEE IS BETTER THAN PREVIO US YEAR G.P. RATE OF 12.96% AND EVEN IF THE BOOKS OF ACCOUNTS ARE REJ ECTED, NO ADDITION CAN BE MADE, IN VIEW OF THE DECISION OF HO NBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS GOTAN LIME KHANIZ UDHY OG (256 ITR 243). FURTHER, HE RELIED ON THE COORDINATE BENCH D ECISION IN CASE OF SHRI MUKESH KUMAR JAIN VS ITO TONK (ITA NO. 1023/JP /2011) AND SHRI PADAM CHAND JAIN VS ITO TONK (ITA NO. 1024/JP/ 2011) WHEREIN THE COORDINATE BENCH HAS DECIDED THAT AVERAGE G.P. RATE MUST BE APPLIED IN PLACE OF HIGHEST G.P. RATE. IN THIS REGA RD, THE LD. AR ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 8 SUBMITTED THAT AVERAGE OF 5 YEARS G.P. RATE OF THE ASSESSEE IS 12.29% AS AGAINST 13.19% DECLARED BY THE ASSESSEE A CCORDINGLY THE SAME SHOULD BE ACCEPTED. THE LD. AR ALSO REFERRED T O THE ASSESSMENT ORDER FOR A.Y. 2010-11 WHEREIN G.P. RATE OF 8.48% W AS ACCEPTED BY THE AO EXCEPT FOR A LUMP SUM TRADING ADDITION OF RS . 1 LACS. FURTHER, THE LD. AR SUBMITTED THAT THE MAIN REASON FOR THE D ECLINE IN G.P. IS INCREASE IN COST OF RAW MATERIAL (WOOD) AS AGAINST INCREASE IN THE SALE PRICE OF FINISHED WOOD FURNITURE WHICH IS EXPO RTED AND SUBMITTED A COMPARATIVE ANALYSIS OF COST OF WOOD IN FINANCIA L YEAR 2004-05 AND FINANCIAL YEAR 2011-12 WHEREIN THE COST OF WOOD INC REASED BY 54% AND SIMILARLY COMPARATIVE DATA FOR INCREASE IN SALE PRICE WAS REFERRED WHEREIN THE SALE PRICE WAS INCREASED BY 25.67% DURI NG THE SAME PERIOD. 8. THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTH ORITIES IN LIGHT OF THE SPECIFIC OBSERVATION OF THE AUDITORS AS WELL AS NON- MAINTENANCE OF QUANTITIES DETAILS OF GOODS TRADED A ND MANUFACTURED BY THE ASSESSEE AND SUBMITTED THAT THE BOOKS OF ACC OUNTS HAVE BEEN RIGHTLY REJECTED BY THE ASSESSING OFFICER AND UPHEL D BY LD. CIT(A). REGARDING ESTIMATION OF G.P. RATE, THE LD. DR SUBMI TTED THAT THE AO HAS RELIED ON THE TRIBUNAL ORDER FOR A.Y. 2008-09 W HERE G.P RATE OF 17.20% WAS UPHELD AND GIVEN THE SIMILARITY OF FACTS IN THE YEAR UNDER CONSIDERATION, THE G.P. RATE OF 17.20% IS JUS TIFIABLE AND FURTHER THERE IS NO BASIS WHICH HAS BEEN GIVEN BY THE LD. C IT(A) WHEREBY THE GP RATE HAS BEEN REDUCED TO 15%. ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 9 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE SPECIFIC OBSERV ATIONS OF THE AUDITORS IN TERMS OF INCONSISTENCY IN MAINTAINING T HE BOOKS OF ACCOUNT AND NOT FOLLOWING THE WELL ACCEPTED ACCOUNT ING PRINCIPLES AND THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE FOR A.Y. 2008-09 WHEREIN ON SIMILAR BASIS THE BOOKS OF ACCOU NTS WERE REJECTED, WE SEE NO REASON TO INTERFERE WITH THE OR DER OF THE LOWER AUTHORITY IN TERMS OF REJECTION OF THE BOOKS OF ACC OUNTS. 10. REGARDING ESTIMATION OF G.P. RATE, WHEREIN THE BOOKS OF ACCOUNTS ARE REJECTED, A FAIR ESTIMATE IS REQUIRED TO BE MADE BY THE ASSESSING OFFICER. THE PRINCIPLE OF AVERAGE TAKING INTO CONSIDERATION LAST 5 YEARS PAST HISTORY IS CLEARLY A ROBUST AND F AIR BASIS OF ESTIMATION TO DETERMINE THE GROSS PROFITS FOR THE Y EAR UNDER CONSIDERATION. THE LD. AR HAS SUBMITTED THAT AVERAG E G.P RATE OF LAST 5 YEARS COMES TO 12.29% AS AGAINST DECLARED G.P. RA TE OF 13.19% IN THE YEAR UNDER CONSIDERATION. ON PERUSAL OF RECORDS , THE TRACK RECORD OF DECLARED GROSS PROFIT BY THE ASSESSEE AND GROSS PROFIT AS UPHELD EITHER BY AO OR BY HIGHER APPELLATE AUTHORITIES IS AS UNDER:- ASSESSMENT YEAR 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 G.P % (AS DECLARED) 13.85 14.11 1 2.03 8.48 12.96 13.19 G.P % (AS AFFIRMED, WHERE APPLICABLE) 17.2 17.2 12.03 8.52 12.96 ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 10 IN LIGHT OF ABOVE, THE AVERAGE G.P RATE OF LAST 5 Y EARS AS FINALLY AFFIRMED COMES TO 13.58%. THE AO IS ACCORDINGLY DI RECTED TO APPLY THE G.P. RATE OF 13.58% AS AGAINST G.P RATE OF 13.1 9% DECLARED BY THE ASSESSEE. THE RESPECTIVE GROUNDS OF APPEAL ARE ACCORDINGLY DISPOSED OFF. 11. IN RESPECT OF GROUND NO. 2, THE ASSESSEE HAS CH ALLENGED THE ADDITION OF RS. 1,31,036/- U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS ON PAYMENT MADE TO EXPORT PROMOTION COUNCIL FOR HANDICRAFT WORKING UNDER MINISTRY OF COMMERCE AND INDUSTRY FOR EXPORT TRADE FAIR. THE PRINCIPLE CONTENTION OF THE LD. AR IS THA T THE SAID PAYMENT IS NOT LIABLE FOR TDS IN TERMS OF PROVISIONS OF SECTIO N 196 WHICH PROVIDES THAT NO DEDUCTION OF INCOME TAX SHALL BE M ADE BY ANY PERSON FROM ANY SUM PAYABLE TO A COOPERATION, ESTAB LISHED BY OR UNDER ANY CENTRAL ACT WHICH IS UNDER ANY LAW FOR TI ME BEING IN FORCE, EXEMPT FROM INCOME TAX ON ITS INCOME. WE FIND THAT NO INFORMATION WAS SUBMITTED BEFORE THE ASSESSING OFFICER ON THE N ATURE OF PAYMENT. THE LD. CIT(A) UPHELD DISALLOWANCE STATIN G THAT THE ASSESSEE HAS NOT FILED ANY RECEIPT/DOCUMENT WHICH S UGGESTED THAT THE PAYMENT IS TOWARDS REGISTRATION CUM MEMBERSHIP CHARGES. BEFORE THIS BENCH, THE ASSESSEE HAS SUBMITTED THAT THE PAYMENT HAS BEEN MADE TO EXPORT PROMOTION COUNCIL OF WHICH ASSE SSEE IS A MEMBER FOR BOOKING OF STALL AREA AT NEW DELHI AND THE PAYMENT IS NOT LIABLE FOR TDS IN TERMS OF SECTION 196 OF THE A CT. ALTERNATIVELY IT WAS SUBMITTED THAT THE PAYMENT IS LIABLE FOR TDS U/ S 194(I) AND SINCE THE PAYMENT IS LESS THAN THE THRESHOLD OF RS. 1.8 LACE. THERE IS ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 11 NO LIABILITY TOWARDS TDS AND ACCORDINGLY THE ADDITI ON MADE BY THE ASSESSING OFFICER MAY BE DELETED. 12. IN OUR VIEW, FIRSTLY REGARDING THE APPLICABILIT Y OF SECTION 196 OF THE ACT, THERE IS NOTHING ON RECORD TO SUGGEST THAT EXPORT PROMOTION COUNCIL IS EXEMPT FROM PAYMENT OF INCOME TAX. HENCE , IN ABSENCE OF THE SAME, WE ARE UNABLE TO ACCEDE TO THE CONTENTION OF THE LD. AR THAT NO TDS IS LIABLE ON THE SUBJECT PAYMENT. REGA RDING THE ALTERNATIVE CONTENTION OF THE LD. AR REGARDING APPL ICABILITY OF SECTION 194(I) OF THE ACT, THE ASSESSEE IS TAKING VARYING C ONTENTION REGARDING EXACT NATURE OF PAYMENT. NO EVIDENCE IS AVAILABLE ON RECORD TO DETERMINE THE EXACT NATURE OF PAYMENT WHETHER ITS TOWARDS MEMBERSHIP FEES OR TOWARDS PARTICIPATION IN TRADE F AIR AND STALL BOOKING OR BOTH. ACCORDINGLY, WE ARE SETTING ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE THE EXACT NATURE OF PAYME NT AND DECIDE THE MATTER A FRESH AS PER LAW. HENCE, THE GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 13. NOW COMING TO GROUND NO. 3 OF THE ASSESSEES AP PEAL WHEREIN THE ASSESSEE HAS CHALLENGED THE ADDITION U/S 69A OF THE ACT IN RESPECT OF CASH DEPOSIT IN PERSONAL SAVING BANK ACC OUNT MAINTAINED BY THE ASSESSEE. 14. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING, ON PERUSAL OF BANKS STATEMEN T OF THE SAVING BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH AXIS B ANK, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MAD E CASH DEPOSITS ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 12 ON VARIOUS DATES TOTALLING TO RS. 37,34,500/- IN HI S SAVING BANK ACCOUNT. THEREAFTER A SHOW CAUSE NOTICE WAS ISSUED DATED 28.02.2015 WHEREIN THE ASSESSEE WAS ASKED TO EXPLAI N THE SOURCE OF SUCH CASH DEPOSITS. THE ASSESSING OFFICER NOTED THA T ON 9 TH MARCH, 2015, THE ASSESSEE FAILED TO FILE ANY REPLY IN RESP ECT OF CASH DEPOSITS. THEREAFTER ON THE NEXT DATE OF HEARING I.E. 12.03.2 015, THE LD. AR OF THE ASSESSEE ATTENDED AND FILE REPLY IN REGARD TO REJECTION OF BOOKS OF ACCOUNT AND DETAILS OF C&F CHARGES BUT AGAIN FAI LED TO FILE ANY EXPLANATION IN RESPECT OF UNEXPLAINED MONEY DEPOSIT ED IN HIS SAVING BANK ACCOUNT. ACCORDINGLY, IN ABSENCE OF THE NECESS ARY EXPLANATION FURNISHED BY THE ASSESSEE, AN ADDITION OF RS. 37,34 ,500/- WAS MADE U/S 69A OF THE ACT CONSIDERING THE DEPOSIT IN SAVIN G BANK ACCOUNT AS UNEXPLAINED MONEY FROM UNDISCLOSED SOURCE OF INCOME . 15. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE CASH D EPOSITS IN HIS BANK ACCOUNT IS FULLY VERIFIABLE FROM PERSONAL CASH DEPOSIT AND BALANCE SHEET. THE LD. CIT(A) HELD THAT SINCE THE P ERSONAL CASH BOOK AND BALANCE SHEET WERE NOT FILED DURING THE ASSESSM ENT PROCEEDINGS AND THE ASSESSEE DID NOT FILE ANY APPLICATION FOR A DMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE ACT THIS ADDITIONAL EVIDENCE CANNOT BE ACCEPTED. FURTHER THE CASH BOOK SHOWS RECEIPT OF CASH FROM VARIOUS PERSONS FOR WHICH NO SUPPORTING E VIDENCE WAS FILED BY THE ASSESSEE. ACCORDINGLY, THE LD CIT(A) CONFIRM ED THE ADDITION MADE BY THE AO. BEING AGGRIEVED, THE ASSESSEE IN T HIS APPEAL BEFORE US ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 13 16. THE LD. AR SUBMITTED THAT THERE WAS NO NECESSIT Y TO FILE ANY APPLICATION UNDER RULE 46A BEFORE THE LD CIT(A) FOR THE SIMPLE REASON THAT AO HIMSELF STATED IN PARA-1 OF HIS ORDER THAT PRODUCED BOOKS OF ACCOUNTS CONSISTING OF CASH BOOK, LEDGER, BANK STAT EMENT WHICH WERE TEST CHECKED AND THE CASE WAS DISCUSSED WITH HIM W HICH CLEARLY SHOWS THAT COMPLETE BOOKS OF ACCOUNTS WERE PRESENT BEFORE THE LD. AR. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS PROPERLY RECORDED THE DEPOSITS MADE IN BANK IN HIS PERSONAL BALANCE SHEET AND THERE IS SUFFICIENT BALANCE IN HIS PERSONAL CAS H BOOK AND THE ASSESSEE HAS OFFERED THE NECESSARY EXPLANATION IN I TS REPLY DATED 12.03.2015 ALONG WITH SUPPORTING TO THE LD. AO AND LD CIT(A) WHO HAS NOT BEEN CONCEDED PROPERLY. 17. ON PERUSAL OF ASSESSEES REPLY DATED 12.03.2015 AVAILABLE AT APB 21-23, IT IS NOTED THAT AT PARA-4 THE ASSESSEE HAS SUBMITTED AS UNDER:- (IV) WE ARE ALSO PRODUCING COMPLETE BOOKS OF ACCOU NTS AND PERSONAL BALANCE SHEET OF THE ASSESSEE ALONG WITH C ASH BOOK, BANK BOOK, AND SUPPORTING AGREEMENT FOR SOURCE OF C ASH DEPOSIT IN BANK FOR THE FINANCIAL YEAR 2011-12. 18. IN LIGHT OF ABOVE, WE ARE SETTING ASIDE THIS MA TTER TO THE FILE OF THE AO TO EXAMINE THE ABOVE BOOKS OF ACCOUNTS TO DE TERMINE THE SOURCE OF CASH DEPOSIT IN THE PERSONAL BANK ACCOUNT OF THE ASSESSEE. WE ARE NOT GETTING INTO THE MERIT OF THE MATTER AND THE CONTENTIONS RAISED BY THE ASSESSEE EXPLAINING THE SOURCE OF DEP OSITS AS THE SAME HAS NOT BEEN EXAMINED BY THE AO. THE APPELLANT IS AT LIBERTY TO RAISE ITS SAID CONTENTIONS BEFORE THE AO AND THE AO WILL EXAMINE THE SAME ITA NO. 495 & 487/JP/2016 SH. MANOJ KUMAR JOHARI VS. ACIT, SIKAR 14 AND GIVE HIS FINDINGS AS PER LAW. IN THE RESULT, T HE GROUND IS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND THE REVENUE ARE DISPOSED OFF WITH ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/17 SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/07/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SH. MANOJ KUMAR JOHARI, PROP. OF THE ART PALACE, SIKAR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE, SIKAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 495&487/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR