Ankur Goel, Karnal V. JCIT, Karnal

ITA 6213/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2982 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RC DANDEY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.6213/DEL/2013 ASSESSMENT YEAR : 2009-10 ANKUR GOEL, 2201/13, URBAN ESTATE, KARNAL. VS. JCIT, RANGE KARNAL, KARNAL. PAN : AGVPB8053C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADV. DEPARTMENT BY : SHRI R. C. DANDEY, SR.DR DATE OF HEARING : 27-09-2017 DATE OF PRONOUNCEMENT : 15-12-2017 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 11.07.2013 OF THE CIT(A), KARNAL RELATING TO ASSESS MENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND DERIVES INCOME FROM WHOLESALE TRADING OF TIMBER UND ER THE NAME AND STYLE OF M/S SHREE RAMA NAND TIMBERS. HE FILED HIS RETURN O F INCOME ON 03.03.2010 DECLARING TOTAL INCOME OF RS.2,65,810/-. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON EXAMINATION O F THE DOCUMENTS AND STOCK REGISTER NOTED THAT DURING THE PERIOD 01.04.2008 TO 12.06.2008 THE ASSESSEE HAD MADE TOTAL PURCHASES OF RS.1,73,27,912/ - WHICH WER E SOLD FOR RS.L,82,42,622/ - 2 ITA NO.6213/DEL/2013 AND THE CLOSING STOCK AS ON 12.06.2008 WAS DECLARED AT NIL. HE NOTED THAT THE TOTAL GROSS PROFIT EARNED OUT OF THESE TRANSACTIONS FROM 01.04.2008 TO 12.06.2008 COMES TO RS.9,14,710/- WHICH GAVE A G.P. RATE OF 5% . 3. HE NOTED FROM THE BOOKS OF ACCOUNTS THAT IN ORDE R TO BRINGING DOWN THE G.P. RATE THE ASSESSEE STARTED MANAGING ITS ACCOUNT S WHICH WAS EVIDENT FROM THE FACT THAT THE NEXT ENTRY MADE IN THE STOCK REGISTER WAS ON 13.06.2008. ON THIS DATE THE ASSESSEE HAD PURCHASED TIMBER OF 1407.0238 CFT FOR RS.4,93,865/- FROM SHREE AMARNATH TIMBER, DELHI. HOWEVER, HE NOT ICED A VERY STRANGE FACT THAT THE CLOSING STOCK OF THIS TIMBER OF 1407.0238 CFT WAS REFLECTED AT RS.3,99,183.70/- IN THE STOCK REGISTER. 4. FURTHER THE A.O. NOTED THAT AS PER THE STOCK REG ISTER THERE WAS NIL CLOSING STOCK AS ON 28.03.2009 AND, THEREAF TER, THE PURCHASES WERE MADE ONLY ON 31.03.2009. THE A.O. MADE AN EXAMINAT ION OF QUANTITATIVE DETAILS OF TIMBER PURCHASES ON 31.03.2009 AND NOTED THAT THE TOTAL OF 4989.9671 CFT WAS PURCHASED BY THE ASSESSEE, WHEREAS HE SOLD 4960.3171 CFT ON THE SAME DATE AND REFLECTED NIL CLOSING STOCK AS ON 31. 03.2009 IN THE STOCK REGISTER. MATHEMATICALLY, THIS ENTRY OF NIL IN THE CLOSING STOCK BY THE ASSESSEE ON 31.03.2009 WAS WRONG AS THE ASSESSEE SHOULD HAVE HAD 30 CFT TIMBER WITH HIM ON 31.03.2009. THEREFORE, BOTH, THE STOCK REGIS TER AND THE CLOSING STOCK REFLECTED IN THE BALANCE SHEET WERE ERRONEOUS. 3 ITA NO.6213/DEL/2013 5. ON ENQUIRY FROM THE ASSESSEE, DURING THE COURSE OF SCRUTINY PROCEEDINGS THE ASSESSEE CAME UP WITH AN EXPLANATION THAT THERE WAS SHORT-SUPPLY OF TIMBER OF 30 CFT FROM THE SUPPLIER FROM WHOM THE PURCHASE WERE MADE. FURTHER, THE ASSESSEE ALSO ADMITTED THAT IT DID NOT RAISE ANY DE BIT-NOTE AGAINST THE SUPPLIER AND NO SUCH DEBIT ENTRY WAS MADE IN THE TRADING ACC OUNT. THE ASSESSEE CONTENDED THAT THIS WAS THE SOLE TRANSACTION WHICH WAS NOT ACCURATELY REFLECTED IN THE BOOKS AND ON THIS SOLE ACCOUNT THE BOOKS OF ACCOUNTS CANNOT BE REJECTED. 6. AS REGARDS THE REFLECTION OF G.P. RATE OF 5% EAR NED BY THE ASSESSEE FROM 14.04.2008 TO 12.06.2008, HE CONTENDED THAT THERE I S A VARIATION AS SALE RATES TO DIFFERENT PARTIES VARY AND THERE IS A VARIATION IN THE RATES OF TIMBER FOR QUALITY, SIZE, COLOUR, VARIETY, SHAPE ETC. THE ASSESSING OF FICER FURTHER NOTED THAT THE TOTAL VALUE OF TIMBER PURCHASED FROM 13.06.2008 TO 27.06.2008 IS RS.22,67,936/- WHEREAS AS PER THE CLOSING STOCK SHOWN IN THE STOCK REGISTER AS ON 27.06.2008 THE SAME WAS SHOWN AT RS.20,63,664.74/-. THE DETAI LS OF THIS ARE TABULATED BY THE A.O. IN THE ASSESSMENT ORDER AND THE SAME IS RE PRODUCED BELOW:- DATE NAME OF THE PARTY QUA NTITY AMOUNT 13.06.2008 SHREE AMARNATH TIMBER DELHI 1407.0238 CF T 493865 21.06.2008 NAVEEN TIMBER DELHI 1467.7055 CFT 491681 23.06.2008 -DO- 1700.1595 CFT 493046 27.06.2008 -DO- 1710.0441 CFT 465913 -DO- -DO- 943.5073 CFT 293431 TOTAL 2267936 7. ACCORDINGLY, THE A.O. NOTED THAT THE ASSESSEE HA S SHOWN A DIFFERENCE IN FIGURE OF RS.2,04,272/- WHICH IS NOT REFLECTED IN T HE BOOKS OF ACCOUNTS. THE 4 ITA NO.6213/DEL/2013 ASSESSING OFFICER NOTED THAT 90% OF THE TIMBER WAS PURCHASED BY THE ASSESSEE FROM HIS 3 SISTER CONCERNS NAMELY M/ S NAVEEN TIMBE RS, DELHI, SHREE AMARNATH TIMBERS, DELHI AND M/S NAVEEN TIMBERS (P) LTD., DEL HI AND THEREFORE, IT WAS VERY EASY FOR THE ASSESSEE TO MANAGE THE BILLS AS P ER HIS CONVENIENCE AND MANAGE THE G.P. RATE ALSO. THE ASSESSING OFFICER F URTHER NOTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DID NOT GIVE A TRUE PICT URE OF THE BUSINESS AND THAT THE TRADING RESULTS WERE NOT VERIFIABLE AS THE ASSESSEE HAD NOT MAINTAINED ANY RECORD IN RESPECT OF THE QUALITY, VARIETY, COLOUR, SIZE AN D SHAPES AND DIFFERENT KINDS OF WOOD/TIMBER SOLD BY HIM WHEN THE ASSESSEE HIMSELF H AD ADMITTED THAT PRICE OF TIMBER VARIES ON ACCOUNT OF THESE FACTORS. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND APP LIED THE G.P. RATE OF 5% WHICH WAS THE G.P. RATE SUO-MOTU REFLECTED BY THE ASSESSEE FOR THE SALES MADE FROM 01.04.2008 TO 12.06.2008. THE ASSESSING OFFIC ER ACCORDINGLY MADE AN ADDITION OF RS.44,77,601/- TO THE TOTAL INCOME OF T HE ASSESSEE. 8. BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED T HE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 145(3 ) AND THEREBY FRAMING THE GP AT THE FLAT RATE OF 5% FOR THE ENTIRE YEAR. IT WAS ARGUED THAT THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE BODY OF THE AS SESSMENT ORDER ARE MERELY SURMISES AND CONJECTURES ALTHOUGH THERE ARE SOME TY PE OF MINOR ERRORS WHILE MAKING ACCOUNTS WHICH IS POSSIBLE IN CASE OF AN ASS ESSEE WHO HAS STARTED BUSINESS FOR THE FIRST TIME WITHOUT HAVING SUFFICIE NT RESOURCES AND MEAGER 5 ITA NO.6213/DEL/2013 CAPITAL. HOWEVER, THE SAME CANNOT BE THE BASIS FOR REJECTING THE BOOK RESULT. SO FAR AS THE OBSERVATIONS OF THE ASSESSING OFFICER TH AT IN THE AUDIT REPORT IN THE FORM NO.3CD, THERE IS NO MENTION OF THE STOCK REGIS TER IS CONCERNED, IT WAS ARGUED THAT IT WAS A CLERICAL ERROR. SO FAR AS ALL EGATIONS OF THE ASSESSING OFFICER THAT NON-MAINTENANCE OF STOCK RECORD IN RESPECT OF QUALITY, VARIETY, COLOUR, SIZE AND SHAPE IS CONCERNED, THE ASSESSEE ADMITTED THE S AME. HOWEVER, IT WAS ARGUED THAT SINCE THE ASSESSEE HAS ONLY ONE ITEM I. E. TIMBER, THEREFORE, IT IS NOT REQUIRED TO MAINTAIN THE STOCK REGISTER ON THE BASI S OF QUALITY, SIZE, COLOUR, VARIETY AND SHAPE ETC.. IT WAS FURTHER ARGUED THAT THE ASSESSEE HAS NOT VIOLATED ANY PROVISION OF THE INCOME-TAX ACT SO AS TO ATTRAC T THE PROVISION OF SECTION 145(3). IT WAS ACCORDINGLY ARGUED THAT THE ORDER O F THE ASSESSING OFFICER BE SET- ASIDE AND THE BOOK RESULT BE ACCEPTED. 9. HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH T HE EXPLANATION GIVEN BY THE ASSESSEE. HE EXAMINED CERTAIN INVOICES ALONG W ITH THE STOCK REGISTER AND OBSERVED THAT THESE ARE NOT MAINTAINED QUALITY WISE . FURTHER, IN COLUMN NO.28 IN FORM NO.3CD OF THE TAX AUDIT REPORT, THE ASSESSEE F AILED TO FURNISH THE QUANTITY DETAILS. HE HELD THAT THE RATES OF TIMBER VARY SUB STANTIALLY FROM QUALITY TO QUALITY AND THEREFORE CORRECT VALUATION OF CLOSING STOCK CANNOT BE DONE WITHOUT MAINTAINING THE STOCK REGISTER QUALITY WISE. HE FU RTHER OBSERVED THAT AS PER THE PROVISION OF SECTION 44AB, THE ASSESSEE WAS REQUIRE D TO MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS MAY ENABLE THE ASSES SING OFFICER TO DETERMINE 6 ITA NO.6213/DEL/2013 CORRECT INCOME OF THE ASSESSEE IN ACCORDANCE WITH T HE PROVISIONS OF THE ACT. THE CLOSING STOCK IS ONE OF THE IMPORTANT ITEM OF T HE TRADING ACCOUNT AND, THEREFORE, THE CORRECTNESS OF TRADING RESULTS DEPEN DS ON THE CORRECTNESS OF THE VALUATION OF CLOSING STOCK ALSO. SINCE THE ASSESSE E IN THE INSTANT CASE HAS NOT MAINTAINED THE STOCK REGISTER QUALITY WISE OF TIMBE R WHICH VARY FROM QUALITY TO QUALITY, THEREFORE, CORRECT POSITION OF CLOSING STO CK CANNOT BE DETERMINED. RELYING ON VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BRITISH PAINTS INDIA L TD. REPORTED IN 188 ITR 44, HE UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER A MOUNTING TO RS.47,77,601/-. HE ALSO RELIED ON THE DECISION OF THE HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT VS. M/S MAJESTIC AUTO LTD. IN ITA N O.116 OF 2004 ORDER DATED 22.05.2013 WHEREIN THE HON'BLE HIGH COURT HELD THAT PROPER MAINTENANCE OF STOCK IS REQUIRED TO BE MAINTAINED BY AN ASSESSEE H OWEVER SIMILAR THE STOCK IS. 10. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BA D BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN REJECTING THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISION OF SECTION 145(3 ) OF THE ACT. (II) THAT THE BOOKS HAVE BEEN REJECTED DESPITE THE ASSESSEE MAINTAINING PROPER BOOKS OF ACCOUNTS. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE FACT THAT THE B OOKS OF ACCOUNT HAVE BEEN DULY AUDITED UNDER THE PROVISIONS OF SECTION 44AB A ND HAVE BEEN CERTIFIED BY THE AUDITOR THAT THE BOOKS OF ACCOUNTS HAVE BEEN PR OPERLY MAINTAINED. 7 ITA NO.6213/DEL/2013 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN MAKING ADDITION OF RS.47,77,601/- APPLYING AN ARBITRARY G.P. RATE OF 5 %. (II) THAT THE G.P. RATE HAS BEEN ESTIMATED WITHOUT THERE BEING ANY BASIS FOR THE SAME. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ESTIMATION OF THE GROSS PROFIT AT RS.61,32,347/- AS AGAINST GROSS PROFIT OF RS.13, 54,746/- AS PER THE BOOKS OF ACCOUNT IS BASED ON PURELY SURMISES AND CONJECTURES AND AS SUCH UNSUSTAINABLE IN LAW. (II) THAT THE ABOVE SAID ADDITION IS UNSUSTAINABLE IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON ACCOUNT OF ANY SALE OR PURCHASE OUTS IDE THE BOOKS OF ACCOUNT. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 11. LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGE D THE ORDER OF THE LD. CIT(A). REFERRING TO PAGE 29 TO 49 OF THE PAPER BO OK, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PURCHASE AND SALE ALONG WITH QUANTITY IS MATCHING. THERE IS ABSOLUTELY NO CASH SALE AND THERE IS ALSO NO ALLEGATION ON THE PART OF THE REVENUE THAT THE ASSESSEE HAS RECEIVED SOMETHING MO RE THAN WHAT HAS BEEN DISCLOSED. HE ACCORDINGLY SUBMITTED THAT MERELY BE CAUSE OF SOME CLERICAL ERRORS, THE ASSESSING OFFICER CANNOT REJECT THE BOO K RESULTS AND APPLY THE GP RATE OF 5% AND THEREBY MAKE HUGE ADDITION OF RS.47, 77,601/-. RELYING ON VARIOUS DECISIONS, HE SUBMITTED THAT WHERE THE BOOK S OF ACCOUNT OF THE ASSESSEE WERE DULY AUDITED AND THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR DISCREPANCY THEREIN AND THE INCOME OF THE ASSESSEE WAS CLEARLY DISCERNABLE FROM THE ACCOUNTING METHOD FOLLOWED BY IT, ACCOUNTS OF THE ASSESSEE COULD NOT BE SAID TO BE DEFECTIVE OR INCOMPLETE, ME RELY BECAUSE STOCK REGISTER 8 ITA NO.6213/DEL/2013 WAS NOT MAINTAINED IN A PARTICULAR FORM. HE ALSO R ELIED ON THE FOLLOWING DECISIONS :- (I) CIT VS. JACKSONS HOUSE, (2011) 198 TAXMAN 385. (II) CIT VS. BINDALS APPARELS, (2011) 332 ITR 410. (III) ASHOKE REFRACTORIES (P.) LTD. VS. CIT, (2005) 279 I TR 457. (IV) HARLAL HEMRAJ VS. ITO, (1982) 14 TTJ 505. (V) PANDIT BROS. VS. CIT, (1954) 26 ITR 159. (VI) DCIT VS. PARAS DYEING & PRINTING MILLS (P.) LTD., ( 2010) 4 ITR 29. (VII) PUSHPANJALI DYEING & PRINTING MILLS (P.) LTD. VS. J CIT, (2001) 72 TTJ 886. HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 12. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT WHEN THE ASSESSEE HAS NOT MAINTAI NED STOCK REGISTER AS PER QUALITY, SHAPE, COLOUR, SIZE ETC., THEREFORE, CORRE CT VALUATION OF CLOSING STOCK IS NOT POSSIBLE. THE PRICE OF TIMBER DEPENDS ON THE A BOVE ITEMS. THEREFORE, WHEN THE CORRECT PROFIT CANNOT BE DETERMINED IN ABSENCE OF COMPUTING THE CORRECT CLOSING STOCK, THE BOOKS OF ACCOUNT HAVE TO BE REJE CTED AND ESTIMATION HAS TO BE MADE. FURTHER, THE RATE OF 5% APPLIED BY THE ASSES SING OFFICER AND UPHELD BY THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS JUSTIFIED. HE ACCORDINGLY ARGUED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 9 ITA NO.6213/DEL/2013 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL ARGUMENT S MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONS IDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTA NT CASE IS ENGAGED IN THE BUSINESS OF WHOLE-SALE TRADING OF TIMBER UNDER THE NAME AND STYLE OF M/S SHREE RAMA NAND TIMBERS. SINCE THE ASSESSEE HAS NOT MAIN TAINED ITS STOCK REGISTER ON THE BASIS OF QUALITY, SHAPE, SIZE, COLOUR, VARIETY ETC. AND SINCE THE AUDIT REPORT DOES NOT MENTION THE MAINTENANCE OF ANY STOCK REGIS TER, THE ASSESSING OFFICER, INVOKING THE PROVISIONS OF SECTION 145(3) OF THE I. T. ACT REJECTED THE BOOK RESULTS AND ADOPTED NET PROFIT OF 5% OF THE TURNOVE R WHICH HAS BEEN UPHELD BY THE LD. CIT(A). IT IS THE SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESSEE THAT SINCE THE PURCHASE AND SALE AND QUANTITY IS MATCHING AND THERE IS NO EVIDENCE THAT THE ASSESSEE HAS RECEIVED ANYTHING MORE THAN WHAT HAS B EEN SOLD AS SALE THE ADDITION IS UNCALLED FOR BY ESTIMATING THE NET PROF IT AT THE RATE OF 5%. IT IS ALSO HIS SUBMISSION THAT THE MERE NON-MAINTENANCE OF STO CK REGISTER IN A PARTICULAR FORM CANNOT BE A GROUND TO REJECT THE BOOK RESULTS AND ESTIMATE PROFIT ESPECIALLY WHEN THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND T HE AUDITORS HAVE NOT POINTED OUT ANY DEFECT. IT IS ALSO HIS SUBMISSION THAT MER ELY BECAUSE OF SOME MARGINAL DISCREPANCY WHICH HAPPENS IN NORMAL COURSE IN A NEW BUSINESS LIKE THAT OF THE ASSESSEE WITH MEAGER CAPITAL, THE SAME CANNOT BE A GROUND TO DISTURB THE TRADING RESULTS. WE FIND SOME FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. 10 ITA NO.6213/DEL/2013 ADMITTEDLY, THERE IS NO DEFECT IN THE BOOKS OF ACCO UNT MAINTAINED BY THE ASSESSEE. THERE ARE CERTAIN DISCREPANCY IN THE VAL UATION OF STOCK DURING THE MIDDLE OF THE YEAR WHICH HAS BEEN POINTED OUT BY TH E ASSESSING OFFICER AND NOT PROPERLY EXPLAINED BY THE LD. COUNSEL FOR THE ASSES SEE. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT WHICH WERE DULY AUDITED AND THE AUDITORS HAVE NOT POINTED OUT ANY DEFECT IN THE BOO KS OF ACCOUNT. THERE IS ALSO NO QUALIFICATION BY THE AUDITORS REGARDING ANY DEFE CT ON ACCOUNT OF NON- MAINTENANCE OF STOCK REGISTER IN A PARTICULAR MANNE R. IT IS ALSO AN ADMITTED FACT THAT THE VALUATION OF STOCK ON A PARTICULAR DATE CA NNOT BE CORRECTLY DETERMINED IN ABSENCE OF MAINTENANCE OF STOCK RESISTER OF TIMBER ON THE BASIS OF SHAPE, SIZE, QUALITY, COLOUR, ETC.. THEREFORE, REJECTION OF BOO K RESULTS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS JUSTIFIED. AT THE SAM E TIME ADOPTION OF NET PROFIT RATE OF 5% IN THE INSTANT CASE WITHOUT BRINGING ANY COMPARABLE CASE/CASES OF SIMILAR NATURE IN THE SAME LOCALITY IS ALSO HIGHLY ARBITRARY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE PURCHASE AND SALES ALONG WITH QUANTITY AR E MATCHING AND THERE IS NO EVIDENCE THAT THE ASSESSEE HAS RECEIVED ANYTHING MO RE THAN WHATEVER HAS BEEN SHOWN AS SALE CANNOT BE ACCEPTED IN ABSENCE OF MAIN TENANCE OF THE STOCK REGISTER ON THE BASIS OF QUALITY, SHAPE, SIZE, COLO UR, ETC.. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT LUMP SUM ADDITION OF RS.5,00,000/- ON ESTIMATE BASIS FOR POSSIBLE LEA KAGE OF REVENUE UNDER THE 11 ITA NO.6213/DEL/2013 FACTS AND CIRCUMSTANCES OF THE CASE AS AGAINST THE ESTIMATION OF NET PROFIT AT 5% BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT( A) IN THE INSTANT CASE WILL MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCOR DINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF DECEMBER, 2017. SD/- SD/- (SUCHITRA KAMBLE) (R. K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15-12-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI