SHRI SHANKAR GUPTA, JAIPUR V. INCOME TAX OFFICER, WARD-6-4, JAIPUR

ITA 665/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3443 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Bogus
• Section: 251; 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A , JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 665/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 SHRI SHANKAR GUPTA 122, VISHVASSHVARIYA NAGAR EXT. GOPALPURA BYEPASS, JAIPUR CUKE VS. THE ITO WARD- 6(4) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AEPPG 9058 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. GUPTA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/03/2020 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 06 /03/2020 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-2, JAIPUR DATED 22-03-2019 FOR THE ASSESSME NT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 96,18,503/- ON ACCOUNT OF SALE OUT OF BOOKS ON PRES UMPTION BASIS MADE BY AO. ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ENHANCING THE ADDITION OF RS. 41,22,215/- FOR CREDIT ALLOWED ON ACCOUNT OF EXPEND ITURE @ 30% WITHOUT SERVING NOTICE U/S 251(2) OF THE I.T. A CT, 1961 2.1 THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN TH E BUSINESS OF IMPORT OF CHEMICAL ADHESIVE AND SALES THEREOF. THE ASSESSE E FILED THE RETURN ON 01-10-2015 DECLARING TOTAL INCOME OF RS. 9,34,220/- . DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO NOTED THAT AS PER ITS DETAILS THE ASSESSEE PURCHASED MATERIAL OF RS. 3,88,54,935/- WHICH WAS V ALUED BY THE CUSTOM AUTHORITIES AT RS. 3,92,99,838/- FOR LEVYING CUSTOM DUTY. THE AO FURTHER NOTED THAT THE ASSESSEE DEBITED PURCHASES OF RS. 2, 11,77,135/- ON ACCOUNT OF IMPORT. THE AO ASKED THE ASSESSEE TO RECONCILE T HE DIFFERENCE INTER ALIA THE DIFFERENCE BETWEEN THE VALUE OF IMPORTED GOODS AND PAYMENTS MADE FOR PURCHASES. IN RESPONSE, THE ASSESSEE PRODUCED T HE LEDGER OF IMPORT/PURCHASES AS WELL AS THE EVIDENCE REGARDING THE PAYMENTS FOR IMPORT OF GOODS. THE AO NOTED FROM THE LEDGER OF IM PORT THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 3,92,62,287/- AGA INST WHICH VARIOUS DEBIT NOTES AMOUNTING TO RS. 1,80,85,152/- WAS CLAI MED AND BALANCE AMOUNT OF RS. 2,11,77,135/- WAS DEBITED IN THE PROF IT AND LOSS ACCOUNT. THE AO FOUND THAT THE ASSESSEE HAS SHOWN DEBIT NOTE S OF RS. 56,13,075/-, ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 3 RS. 56,40,345/- DATED 11-11-2014 AND RS. 24,87,298/ - DATED 27-02-2015, TOTAL AMOUNTING TO RS. 1,37,40,718/- SHOWN BY THE A SSESSEE ON ACCOUNT OF DEFECTIVE GOODS RECEIVED FROM THE SUPPLIER PARTY FR OM CHINA. THE ASSESSEE ALSO PRODUCED THE DEBIT NOTES ISSUED BY HI M ALONGWITH CORRESPONDING CREDIT NOTES ISSUED BY THE SUPPLIERS AND CLAIMED THAT THE SAID AMOUNT OF IMPORT/PURCHASE IS DEBITED TO THE PR OFIT AND LOSS ACCOUNT AFTER ADJUSTING THE DEBIT NOTES ISSUED BY THE ASSES SEE IN RESPECT OF THE DEFECTIVE GOODS AND CORRESPONDING CREDIT NOTES ISSU ED BY THE SUPPLIER. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESS EE AND TREATED THE SAID AMOUNT OF RS. 1,37,40,718/- AS OUT OF BOOKS SALES. THE AO ACCORDINGLY MADE AN ADDITION OF RS. 96,18,503/- AS NET INCOME A FTER ALLOWING 30% AS EXPENDITURE ON SAID SALES. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) AND REITERATED HIS CONTENTION S THAT REDUCTION OF THE PURCHASES ON ACCOUNT OF DEFECTIVE GOODS CANNOT BE H ELD AS SALES OUT OF BOOKS. THE SAID CHEMICAL BECAME OUTDATED, USELESS A ND HAVING NIL VALUE. THEREFORE, THE ASSESSEE ISSUED DEBIT NOTES TO THE S UPPLIER AND IN RESPONSE THE SUPPLIER HAS ISSUED THE CREDIT NOTES OF THE SAI D AMOUNT. THUS THE SAID AMOUNT WAS REDUCED FROM THE PURCHASES DEBITED TO TH E PROFIT AND LOSS ACCOUNT. THE LD. CIT(A) WAS NOT IMPRESSED WITH THE CONTENTION AND ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 4 EXPLANATION OF THE ASSESSEE AND THE LD. CIT(A) NOT ONLY CONFIRMED THE ADDITION MADE BY THE AO BUT ALSO ENHANCED THE ADDIT ION ON THIS ACCOUNT BY DISALLOWING 30% EXPENDITURE ALLOWED BY THE AO. 2.2 BEFORE US, THE LD.AR OF THE ASSESSEE HAS SUBMIT TED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO CALLED FOR DETAILS AND EVIDENCES REGARDING DEBIT NOTES ISSUED BY THE ASSESSEE ON ACC OUNT OF DEFECTIVE GOODS/ EXPIRY DATE GOODS RECEIVED THROUGH IMPORT AN D THIS WAS THE LIABILITY OF THE ASSESSEE FROM WHOM THESE GOODS WER E IMPORTED. THE ASSESSEE EXPLAINED BEFORE THE AO THAT HE IS DOING B USINESS OF ACRYLIC ADHESIVE WHICH IS IMPORTED FROM CHINA. THIS CHEMI CAL ADHESIVE HAS A LIMITED SHELF LIFE AND ACRYLIC ADHESIVE HAS TO BE S TORED UNDER RECOMMENDED CONDITION I.E. UPTO THE PERIOD OF SHELF LIFE, SO THAT THERE WILL BE NO CHANGE IN PROPERTIES OF THE CHEMICAL DUE TO A TMOSPHERIC CONDITION. THE LD.AR OF THE ASSESSEE HAS REFERRED TO THE HANDB OOK OF ADHESIVE TECHNOLOGY WHICH EXPLAINS THE BASIC GUIDELINES FO R HANDLING AND STORAGE OF ADHESIVE AND SUBMITTED THAT ADHESIVE HAS ITS OWN SHELF LIFE WHICH DEPENDS UPON THE ADHESIVE SYSTEM AND STORAGE CONDITION IN PARTICULAR THE TEMPERATURE. THEREFORE, AFTER THE EX PIRY OF SHELF LIFE OF THE ADHESIVE, ITS PROPERTIES GET CHANGED AND IT BECOMES USELESS AND THE WASTE ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 5 HAS TO BE CLEARED. THEREFORE, THE LD.AR OF THE ASSE SSEE SUBMITTED THAT THE ADHESIVE HAS A LIMITED SHELF LIFE AND THEREAFTER IT BECOMES USELESS ON EXPIRY OF THE DATE OF SHELF LIFE AND AFTER THAT, TH E GOODS BECOME NON- SALEABLE, UNUSABLE AND USELESS. THEREFORE, THE MATE RIAL IMPORTED BY THE ASSESSEE IS FOUND TO BE DEFECTIVE DUE TO EXPIRY OF THE SHELF LIFE. ACCORDINGLY, THE ASSESSEE ISSUED DEBIT NOTES TO THE SUPPLIER WHO HAS ACCEPTED THE SUPPLY OF DEFECTIVE GOODS AND ISSUED T HE CORRESPONDING CREDIT NOTES AS WELL AS CONFIRMATIONS OF THE ISSUAN CE OF CREDIT NOTES REGARDING THE GOODS RECEIVED BY THE ASSESSEE, BEING EXPIRY DATE. THE LD.AR OF THE ASSESSEE HAS REFERRED TO THE E-MAIL CO RRESPONDENCE BETWEEN THE ASSESSEE AND THE SUPPLIER OF GOODS AND SUBMITTE D THAT DOCUMENTS PRODUCED BY THE ASSESSEE ESTABLISHES THE FACTS THAT SOME OF THE GOODS IMPORTED BY THE ASSESSEE WERE FOUND TO BE DEFECTIVE DUE TO EXPIRY DATE AND THEREFORE, THE SAID FACT CANNOT BE REJECTED WIT HOUT ANY CONTRARY MATERIAL. THE LD.AR OF THE ASSESSEE HAS ALSO REFERR ED TO DHL COURIER DETAILS AND RECEIPTS REGARDING CONFIRMATION OF CRED IT NOTES SENT BY THE SUPPLIER. THUS THE LD.AR OF THE ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE PRODUCED ALL THE RELEVANT DOCUMENTARY EVIDENCES TO SHOW THAT THE GOODS TO THE TUNE OF RS. 1,37,40,718/- WERE RECEIVED AS D EFECTIVE AND THE SAME ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 6 WERE REDUCED FROM THE PURCHASES/IMPORT ACCOUNT. THE ASSESSEE ISSUED THE DEBIT NOTES OF THE SAID AMOUNT TO THE SUPPLIER OF T HE GOODS WHICH WAS ACCEPTED BY THE SUPPLIER WHO ISSUED CORRESPONDING D EBIT NOTES. THEREFORE, THE PURCHASES SHOWN BY THE ASSESSEE IN THE PROFIT A ND LOSS ACCOUNT IS THE CORRECT FIGURE AND THE AO HAS TREATED THE SAID QUAN TITY OF THE ADHESIVE AS OUT OF BOOKS SALES ONLY ON PRESUMPTION AND SURMISES WITHOUT ANY CONTRARY MATERIAL OR EVIDENCE. WHEN THE ASSESSEE HA S NOT MADE ANY PAYMENT TOWARDS THE IMPORT OF DEFECTIVE GOODS THEN THE SAME CANNOT BE TREATED AS OUT OF BOOK SALES. THE LD.AR OF THE ASSE SSEE FURTHER CONTENDED THAT LD. CIT(A) HAS ENHANCED THE ADDITION WITHOUT I SSUING SHOW CAUSE NOTICE AND THEREFORE, TO THE EXTENT OF ENHANCEMENT, THE ORDER OF THE LD. CIT(A) IS OTHERWISE NOT SUSTAINABLE IN LAW AND VIOL ATION OF PROVISIONS OF SECTION 251(2) OF THE ACT. 2.3 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE AO AS WELL AS THE LD. CIT(A) HAS GIVEN THE FINDING THAT EXCEPT DE BIT NOTES AND CREDIT NOTES THE ASSESSEE HAS NOT PRODUCED ANY OTHER DOCUM ENTARY EVIDENCES TO PROVE THAT GOODS OF SUCH A HIGH VALUE WERE ACTUALLY FOUND DEFECTIVE AND WITHOUT ANY VERIFICATION AND OBJECTION ON THE PART OF THE SUPPLIER, THE SAME WERE ACCEPTED. EVEN THE ASSESSEE HAS NOT PRODU CED ANY APPROVAL OF ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 7 THE RELEVANT AUTHORITY FOR DESTROYING THE GOODS. TH EREFORE, THE CLAIM OF THE ASSESSEE IS NOT FOUND TO BE GENUINE AND THE AO HAS RIGHTLY TREATED THE SAID AMOUNT OF RS. 1,37,40,718/- AS SALES OUTSIDE B OOKS. THE LD. DR THUS RELIED ON THE ORDERS OF LOWER AUTHORITIES. 2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE AO NOTED FROM TH E DETAILS AND DOCUMENTS PRODUCED BY THE ASSESSEE AS WELL AS THE F ROM THE LEDGER ACCOUNT OF IMPORT/PURCHASES THAT THE ASSESSEE HAS R EDUCED THE PURCHASES TO THE TUNE OF RS. 1,37,40,718/- ON ACCOUNT OF DEFE CTIVE GOODS AND ISSUED THE DEBIT NOTES TO THE SUPPLIER. THIS FACT WAS FOUN D TO BE RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE HAS SHOWN IN THE LEDGER ACCOUNT OF GOODS IMPORTED REDUCED BY THREE DEBIT N OTES OF THE AMOUNTS AS UNDER:-. RS. 56,13,075/- RS. 50,40,345/- RS. 24,87,298/- THE AO ASKED THE ASSESSEE TO EXPLAIN THE REDUCTION OF THESE AMOUNTS ON ACCOUNT OF DEBIT NOTES. THE ASSESSEE EXPLAINED THAT CERTAIN QUANTITY OF GOODS IMPORTED FROM M/S. ZHE JIANG JIUERJIU CHEMICA LS CO. LTD. WAS FOUND TO BE DEFECTIVE. THE ASSESSEE PRODUC ED THE INVOICE/BILLS ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 8 OF THESE GOODS AS WELL AS THE DEBIT NOTES ISSUED BY THE ASSESSEE TO THE SUPPLIER AND CORRESPONDING CREDIT NOTES ISSUED BY T HE SUPPLIER BY ACCEPTING THE FACT THAT THE GOODS AS MENTIONED IN T HE DEBIT NOTES AS WELL AS IN IMPORT BILLS WERE DEFECTIVE DUE TO EXPIRY OF DATE. IT IS PERTINENT TO NOTE THAT THE INVOICE REGARDING IMPORT OF THESE GOO DS AND DEBIT NOTES ISSUED BY THE ASSESSEE GIVE THE DETAILS AND DESCRIP TION OF THE GOODS AND PARTICULARLY THE ADHESIVE IN QUESTION. WE FIND THAT THE INVOICE ISSUED BY THE SUPPLIER GIVES THE DETAILS OF QUANTITY OF GOODS AS WELL AS THE AMOUNT IN USD WHEREAS THE ASSESSEE HAS GIVEN THE DETAILS OF THE GOODS MATCHING THE SAME QUANTITY AND GIVING THE REFERENCE OF THE I NVOICE BUT THE AMOUNT IS CONVERTED INTO RUPEES. THE AO HAS NOT DISPUTED T HE DETAILS AS MENTIONED IN THE INVOICE AND THE DEBIT NOTES ISSUED BY THE ASSESSEE AND CORRESPONDING CREDIT NOTES ISSUED BY THE SUPPLIER. THE AO HAS QUESTIONED THE CORRECTNESS OF THE CLAIM ON THE GROUND THAT NO EVIDENCE WAS PRODUCED FOR TRANSPORTATION OF THE DEFECTIVE GOODS BACK TO T HE SUPPLIER. IT IS PERTINENT TO NOTE THAT ONCE THE GOODS ARE IMPORTED FROM CHINA AND FOUND TO BE DEFECTIVE AND THE SAID FACT IS ACCEPTED BY TH E SUPPLIER THEN SENDING BACK TO THESE GOODS TO CHINA MAY NOT BE A WISE DECI SION FOR THE ASSESSEE AS WELL AS THE SUPPLIER DUE TO HEAVY COST INVOLVED IN THE PROCESS. ONCE THE ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 9 DEFECTIVE GOODS IS FOUND TO BE HAVING ZERO VALUE AN D USELESS FOR ANY PURPOSE THEN THERE IS NOT POINT OF INCURRING EXPEND ITURE FOR SENDING THE GOODS BACK TO THE SUPPLIER IN CHINA. THEREFORE, THI S CANNOT BE A REASON FOR DOUBTING THE CLAIM OF THE GOODS RECEIVED BY THE ASS ESSEE AS DEFECTIVE WHEN THE SAID ADHESIVE AFTER EXPIRY OF SHELF LIFE B ECOMES USELESS. THE ASSESSEE ALSO PRODUCED THE CONFIRMATION ISSUED BY T HE SUPPLIER GIVING ALL THE DETAILS OF THE GOODS SUPPLIED, THEIR VALUE BY G IVING INVOICE NUMBER AS WELL AS THE DETAILS OF DEBIT NOTES/CREDIT NOTES ISS UED BY THE PARTIES. THE LD.AR OF THE ASSESSEE HAS REFERRED TO E-MAIL CORRE SPONDENCE BETWEEN THE PARTIES WHEREBY THE SUPPLIER HAS INTIMATED THE ASSE SSEE REGARDING THE CREDIT NOTES ISSUED IN RESPECT OF SUPPLY OF DEFECTI VE GOODS. THE SAID E- MAIL WAS GENERATED ON 30-03-2015 WHICH SHOWS THAT T HE CORRESPONDENCE BETWEEN THE ASSESSEE AND THE SUPPLIER REGARDING THE DEBIT NOTES AND CREDIT NOTES TOOK PLACE AT THE RELEVANT POINT OF TIME. ONC E ALL THESE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE IN SUPPORT OF TH E CLAIM ARE NOT FOUND TO BE BOGUS THEN THE TREATMENT OF OUT BOOKS SALES B Y THE AO IS MERELY BASED ON THE PRESUMPTION AND SUSPICION AND NOT BASE D ON ANY MATERIAL OR DOCUMENTARY EVIDENCES. IT IS PERTINENT TO NOTE THAT ONCE THE ASSESSEE HAS PRODUCE THE RELEVANT DOCUMENTARY EVIDENCES IN SUPPO RT OF THE FACT THAT ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 10 CERTAIN GOODS IMPORTED FROM CHINESE SUPPLIER WERE F OUND TO BE DEFECTIVE AND THIS FACT WAS ACCEPTED BY THE COUNTERPART BY GI VING THE CREDIT OF SAID AMOUNT FROM THE PURCHASE BILLS THEN THE ASSESSEE HA S DISCHARGED HIS ONUS BY PRODUCTION OF THE DOCUMENTARY EVIDENCES. THE AO HAS NOT DOUBTED THE FACT THAT THE ASSESSEE HAS NOT PAID IN RESPECT OF T HE GOODS FOUND TO BE DEFECTIVE AND THEREFORE, TO THE EXTENT OF COST OF T HE PURCHASE OF THE GOODS FOUND TO BE DEFECTIVE WAS REDUCED FROM THE TOTAL CO ST OF PURCHASE AS PER IMPORT BILL. THEREFORE, ACCEPTING THE FACT OF NON-P AYMENT OF PURCHASE PRICE DUE TO THE REASON AS IS MANIFEST FROM THE REC ORD BEING DEFECTIVE GOODS, THE CORRESPONDING SALE OF THE GOODS IS NOT P OSSIBLE. THE DETAILS OF THE GOODS IMPORTED BY THE ASSESSEE WHICH WERE FOUND TO BE DEFECTIVE ARE AS UNDER:- SL. DATE INVOICE NO. QUANTITY AND NATURE OF GOODS AMOUNT (USD) (I) 30.08.2014 INSH- 141830 18000 KGS ADHESIVE GLUE 90300 (II) 30.09.2014 INSH- 141913 18000 KGS ADHESIVE GLUE 90000 (III) 29.11.2014 INSH- 141029 7880 KGS ADHESIVE 39400 TOTAL 219700 THE AO HAS NOT DISPUTED THAT THE VALUE OF THESE GOO DS AS PER THE INVOICE IS USD 219700 AND THE CORRESPONDING VALUE IS IN RS. 1,37,40,718/-. ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 11 THESE FACTS WERE CONFIRMED BY THE SUPPLIER WHICH IS ALSO RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, LEDGER ACCOUNT, S UPPORTING INVOICE, DEBIT NOTES AND CREDIT NOTES ETC. THE GOODS IMPORTE D BY THE ASSESSEE ARE PERISHABLE IN NATURE HAVING LIMITED SHELF LIFE. THE REFORE, THE GOODS RECEIVED BY THE ASSESSEE WERE FOUND TO BE OUT DATE D OR EXPIRY DATE THEN IT WOULD CERTAINLY BECOME USELESS HAVING NO VALUE A S CHEMICAL PROPERTIES AND COMPOUNDS GETS CHANGED AFTER THE SAID PERIOD OF SHELF LIFE. ACCORDINGLY, WE FIND THAT THE CLAIM OF DEFECTIVE GO ODS REDUCED FROM PURCHASE IS ESTABLISHED BY SUPPORTING EVIDENCE AND THEREFORE, THE ADDITION MADE BY THE AO PURELY ON PRESUMPTION AND ASSUMPTION IS LIABLE TO BE DELETED. 2.4.1 THE LD. CIT(A) NOT ONLY CONFIRMED THE ADDITI ON MADE BY THE AO BUT ALSO ENHANCED THE ADDITION BY ADDING A DEDUCTIO N ALLOWED BY THE AO AT 30% TOWARDS EXPENSES ON ALLEGED OUT OF BOOKS SAL ES AT PARA 3.3.4 OF HER ORDER AS UNDER 3.3.4IT IS FURTHER OBSERVED THAT ASSESSING OFFICE R HAS ALLOWED THE COST OF 30% TOWARDS THE EXPENSES ETC. I N CONNECTION WITH SALES MADE OUT OF BOOKS. WHEN THE SALES WERE M ADE OUT OF BOOKS, IT IS PRESUMED THAT ALL EXPENSES PERTAINING TO SUCH TRANSACTIONS HAVE ALREADY BEEN RECORDED IN THE BOOK S OF ACCOUNTS. THEREFORE, I DO NOT AGREE WITH THE OBSERVATIONS OF ASSESSING OFFICER WHO WRONGLY ALLOWED 30% TOWARDS EXPENSES,. ACCORDINGLY, THE ADDITION OF RS. 96,18,503/- IS ENH ANCED TO RS. ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 12 1,37,40,718/-. SINCE THE FINAL ADDITION AFTER THIS APPEAL ORDER IS AT RS. 1,37,40,718/- WHICH IS HIGHER THAN THE ADDITION SUSTAINED. THEREFORE, NO SEPARATE NOTICE UNDER SECTION 251(2) IS REQUIRED TO BE ISSUED TO THE ASSESSEE. THE ADDITION OF RS. 1,37,40 ,718/- IS DIRECTED TO BE ADDED AS INCOME FROM UNDISCLOSED SALES IN HAN D OF ASSESSEE. THEREFORE, THE LD. CIT(A) HAS STATED THAT OVERALL A DDITION IS NOT ENHANCED AS THE LD. CIT(A) HAS DELETED THE OTHER ADDITIONS M ADE BY THE AO ON A SEPARATE ISSUE AND HENCE THE LD. CIT(A) WAS OF THE VIEW THAT NO SEPARATE NOTICE U/S 251(2) IS REQUIRED TO BE ISSUED. IT IS P ERTINENT TO NOTE THAT REQUIREMENT OF ISSUING SHOW CAUSE NOTICE IS MUST PR IOR TO ENHANCEMENT OF THE ASSESSMENT AS ENVISAGED IN SECTION 251(2) OF TH E ACT FOR EACH AND EVERY ENHANCEMENT AND IT DOES NOT DEPEND ON OVERAL L OUTCOME OF THE TOTAL INCOME OF THE ASSESSEE IN PURSUANT TO THE ORD ER OF THE LD. CIT(A). IF THE AO HAS MADE MORE THAN ONE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE AND SOME OF THE ADDITIONS ARE FOUND TO BE NOT SUSTAINABLE BY THE LD. CIT(A) AND ACCORDINGLY DELETED THEN THE ADDITI ON WHICH IS ENHANCED BY THE LD. CIT(A) SHALL SATISFY THE CONDITIONS OF ISSUING SHOW CAUSE UNDER SUB-SECTION 2 OF SECTION 251 AS THE SAME IS NOT OB LITERATED DUE TO REASON THAT CERTAIN OTHER ADDITIONS MADE BY THE AO WERE DE LETED BY THE LD. CIT(A). THEREFORE, THE ENHANCEMENT OF ASSESSMENT HA S TO BE CONSIDERED IN THE CONTEXT OF EACH ISSUE RAISED IN THE APPEAL B EFORE THE LD. CIT(A). ITA NO.665/JP/2019 SHRI SHANKAR GUPTA VS ITO , WARD-6(4), JAIPU R 13 WITHOUT GOING INTO THE CONTROVERSY OF THE VALIDITY OF THE ORDER, ONCE WE FIND THAT THE ASSESSEE HAS ESTABLISHED THE FACTS OF DEFECTIVE GOODS RECEIVED FROM THE CHINESE SUPPLIERS THEN THE ADDITION ITSELF WOULD NOT SURVIVE AND THE SAME IS DELETED. THUS THE APPEAL OF THE ASSESSE E IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 /03/202 0. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06/03/ 2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1 VIHYKFKHZ@ THE APPELLANT- SHRI SHANKAR GUPTA, JAIPUR 2 IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 6(4), JAIPUR 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.665/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR