ITO, Kurukshetra V. M/s K.C. Bricks Traders, Kurukshetra

ITA 671/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68606 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Deemed to accrue or arise in india; Documents seized
• Section: 69C; 143(3); 133A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.703/CHD/2012 ASSESSMENT YEAR : 2007-08 M/S K.C.BRICKS TRADERS, VS THE INCOME TAX OFFICER , ISMAILABAD, WARD 2, DISTT. KURUKSHETRA. KURUKSHETRA. PAN : AACFK-4067D & ITA NO. 671/CHD/2012 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, VS M/S K.C. BRICKS TRADER S, WARD 2, ISMAILABAD, KURUKSHETRA. DISTT. KURUKSHETRA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TEJ MOHAN SINGH ALONGWITH SHRI SATISH KUMAR (PARTNER) DEPARTMENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 25.11.2013 DATE OF PRONOUNCEMENT : 23.12.2013 O R D E R PER SUSHMA CHOWLA, JM THE CROSS-APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS), KARNAL DATED 30.03.2012 RELATING TO ASSESSMENT YEARS 2007-08 AGAINST THE ORDER PASSE D UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS), KARNAL AND LOWER AUTHORITIES ARE NOT JUSTIFIED IN NOT ACCEPTIN G THE BOOKS VERSION OF THE APPELLANT FIRM WHEN ALL THE SALES AND PURCHA SES ARE DULY ENTERED IN THE ACCOUNT BOOKS AND IN APPLYING PROVIS IONS OF SECTION 145(3) OF INCOME TAX ACT. 2. THAT THE G.P. RATE APPLIED BY THE LOWER AUTHORITIES IS NOT BASED ON FACTS AND BOOK VERSION. THE BOOKS OF MADAN LAI B.K .O. WERE NEVER CONFRONTED AT ANY STAGE. THE G.P. RATE @ 20% PRESUM ED ONLY ON ESTIMATED AND IS NOT BASED ON ANY PROOF. 3. THAT THERE WAS NOT STOCK ON THE KILN WHICH WAS N OT ENTERED IN BOOKS . THE SURRENDER OF RS. 20 LAC WAS MADE DUE TO PRESSUR E AND TO PURCHASE PEACE OF MIND AND WHICH WAS TO BE ADJUSTED AGAINST ANY ITEM OR EXPENSE WHICH IS NOT CONSIDERED GENUINE. THE DEPARTMENT HAS TREATED THIS AMOUNT OF RS. 20 LAC S URRENDERED IN SURVEY AS DEEMED INCOME AND ASSESSED U/S 69 OF INCO ME TAX ACT WHICH IS NOT JUSTIFIED. THE AMOUNT OF RS. 20 LAC S URRENDERED IF NOT ACCEPTED AGAINST THE EXPENSES, DISCREPANCIES, STOC KS ETC AND SET OFF IS NOT GIVEN THEN THE SAME SHOULD HAVE NOT BEEN CONSIDERED AS DEEMED INCOME. THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN TREATING THE SAME IS DEEMED INCOME AT ALL. 4. THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIE D IN NOT DELETING THE ADDITIONS ON THE BASIS OF PAGE NO 92,93, AND 95 RS. 5425/- RS. 2000/- AND RS. 2895/- RESPECTIVELY. 5. THAT THE ADDITION OF RS/ 40500/- MADE ON THE BAS IS OF SOME ENTRIES ON PAGE NO 102 OF SEIZED DOCUMENTS IS NOT JUSTIFIED . 6. THAT THE ADDITION OF RS. 50750/- ON THE BASIS OF PAGE NO 15 IMPOUNDED DURING SURVEY IS NOT JUSTIFIED. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DIRECTING TO APPLY G. P. RATE OF 20% ON THE REDU CED SALES OF RS. 52 LACS AGAINST 25% APPLIED BY THE AO RELYING UPON THE G.P. RATE SHOWN BY OTHER COMPARABLE CASES OF THE LINE AND ALSO HAVING REGARD TO OTHER DISCREPANCIES MENTIONED IN THE ASSESSMENT ORDER. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2,43,200/- MAD E ON THE BASIS OF ENTRIES MADE ON PAGE NO.76 TO 78 OF THE LOOSE PAPER S FOUND DURING THE COURSE OF SURVEY WITHOUT APPRECIATING THAT THE ONUS OF PROVING THE SOURCE & GENUINENESS OF ENTRIES APPEARING ON THE LOOSE PAP ERS IS ON THE ASSESSEE WHICH IT FAILED. 3. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 75,660/- MADE ON THE BASIS OF ENTRIES MADE ON PAGES 79 TO 85 OF THE LOOSE PAPERS FOUND DU RING THE COURSE OF SURVEY WITHOUT APPRECIATING THAT THE ONUS OF PROVIN G THE SOURCE AND GENUINENESS OF ENTRIES ON THE LOOSE PAPERS IS ON TH E ASSESSEE WHICH IT 3 FAILED. 4. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) HAS ERRED IN REDUCING THE ADDITION OF RS. 1,61,050/- BY RS.1,48,170/- MADE ON THE BASIS OF ENTRIES MADE ON PAGES 94,96,97,98 & 99 OF THE LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY WITHOUT AP PRECIATING THAT THE ONUS OF PROVING THE SOURCE AND GENUINENESS OF ENTRI ES APPEARING ON THE LOOSE PAPERS IS ON THE ASSESSEE WHICH IT FAILED. 5. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.24,34,200/- MA DE ON THE BASIS OF ENTRIES MADE ON PAGES 103 & 104 OF THE LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY WITHOUT APPRECIATING THAT THESE PA GES HAVE BEEN SIGNED BY SH. KARNAIL SINGH, MUNSHI OF THE ASSESSEE AND PE RTAINED TO THE ASSESSEE, AND THE ONUS OF PROVING THE SOURCE OF GEN UINENESS OF ENTRIES APPEARING ON THE LOOSE PAPERS IS ON THE ASSESSEE WH ICH IT FAILED. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE W AS ENGAGED IN THE MANUFACTURING OF BRICKS DURING THE YEAR UNDER CONSI DERATION. SURVEY OPERATIONS UNDER SECTION 133A(1) OF THE ACT WERE CA RRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 13.03.2007. D URING THE COURSE OF SURVEY, CERTAIN DISCREPANCIES IN STOCK WERE FOUND A ND FURTHER LOOSE PAPERS/DOCUMENTS AND CASH WERE ALSO FOUND. THE ASS ESSEE THROUGH ITS PARTNER SHRI SUDESH KUMAR SURRENDERED AN ADDITIONAL INCOME OF RS. 20,00,000/- IN ADDITION TO THE NORMAL INCOME RETURN ED IN THE RETURN OF INCOME FOR THE FINANCIAL YEAR 2006-07. THE ASSESSE E FURNISHED THE RETURN OF INCOME DECLARING INCOME AT NIL WHICH WAS E-FIL ED ON 10.10.2007. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO FILE VARIOUS INFORMATIONS/DOCUMENTS AND WA S ALSO CONFRONTED WITH THE FACT THAT DURING THE COURSE OF SURVEY UNDE R SECTION 133A OF THE ACT, EXCESS STOCK WAS SURRENDERED AT RS. 17,00,000/ - AND SALES OUTSIDE THE BOOKS OF ACCOUNT AND OTHER INVESTMENTS WERE SUR RENDERED AT RS. 3,00,000/-. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE SHO ULD NOT BE REJECTED AND THE ASSESSMENT BE FRAMED UNDER THE PROVISIONS O F SECTION 145(3) OF THE ACT. IT WAS ALSO PUT TO THE ASSESSEE WHY THE A DDITIONAL INCOME SHOULD NOT BE ASSESSED TO TAX UNDER SECTION 69 OF T HE INCOME TAX ACT. 4 FURTHER THE ASSESSING OFFICER UNDER PARA 3 OF THE A SSESSMENT ORDER HAS ENLISTED THE NOTINGS OF VARIOUS DOCUMENTS IMPOUNDED AT THE TIME OF SEARCH WHICH REFLECTED SALE OF BRICKS OUTSIDE THE B OOKS OF ACCOUNT AND THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN WHY ADDITIO N UNDER SECTION 69C OF THE ACT SHOULD NOT BE MADE. THE ASSESSING OFFICE R HAS REPRODUCED QUESTIONNAIRE AT PAGES 1 TO 4 OF THE ASSESSMENT ORD ER WHICH IS NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. THE REPLY OF T HE ASSESSEE IS ALSO REPRODUCED IN THE ASSESSMENT ORDER AT PAGES 4 TO 11 OF THE ASSESSMENT ORDER WHICH IS BEING REFERRED TO BUT NOT BEING REPR ODUCED FOR THE SAKE OF BREVITY. THE ASSESSING OFFICER NOTED THAT THE ASSES SING OFFICER HAD RETURNED GROSS LOSS OF RS. 14,50,779/- ON SALES OF RS. 42,53,086/-, IN THE FIRST PERIOD FROM 01.04.2006 TO 13.03.2007 I.E. PER IOD UPTO THE DATE OF SURVEY, AND GROSS LOSS OF RS. 593,638/- ON SALES OF RS. 770,516/- FROM 14.03.2007 TO 31.03.2007. THUS IT IS SEEN THAT THE RE IS VAST DIFFERENCE BETWEEN THE GROSS LOSS OF FORMER ACCOUNTING PERIOD AND THE LATER ACCOUNTING PERIOD. THUS, THERE IS GROSS LOSS OF RS . 20,44,417/- ON SALES OF RS. 50,23,602/- FOR THE ENTIRE PERIOD OF 01.04.2 006 TO 31.03.2007 AS AGAINST GROSS PROFIT OF RS. 4,50,376/- AGAINST SALE S OF RS. 23,68,888/-, GIVING A GP RATE OF 19.01% IN THE IMMEDIATELY PRECE DING YEAR I.E. ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER FUR THER NOTED AS UNDER : OUT OF TOTAL BRICKS, SURRENDERED AT RS. 17 LACS, T HE ASSESSEE HAS SHOWN SALES OF RS. 770516/- ONLY FROM 14.03.200 7 TO 31.3.2007 AND NO CLOSING STOCK OF BRICKS HAS BEEN S HOWN. WHEREAS CLOSING STOCK OF RS. 929484/- (RS.1700000/- MINUS RS. 770516/- SHOULD HAVE BEEN WITH THE ASSESSEE FIR M. 7. FURTHER ENQUIRIES WERE RAISED IN RESPECT OF THE OTH ER ITEMS BY THE ASSESSING OFFICER. THEREAFTER THE ASSESSING OFFICE R REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND INVOKED THE PROVISIO NS OF SECTION 145(3) OF THE ACT TO WORK OUT THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ESTIMATED THE SALES OF THE ASSESSEE FOR THE ENTIRE YEAR AT RS. 55 LACS AND 5 ADOPTING THE GP RATE OF THE IMMEDIATELY PRECEDING Y EAR @ 25%, THE GROSS PROFIT WAS WORKED OUT AT RS. 13,75,000/- AS AGAINST GROSS LOSS OF RS. 20,44,417/- DECLARED BY THE ASSESSEE. CONSEQUENTLY, TRADING ADDITION OF RS. 34,19,417/- WAS MADE TO THE ASSESSEE'S DECLARE D INCOME. 8. BEFORE THE CIT(APPEALS), THE ASSESSEE MADE A COMPAR ISON BETWEEN THE EXPENSES ON THE SALES OF ASSESSMENT YEAR 2006-0 7 AND 2007-08 AND POINTED OUT THAT THOUGH IN ASSESSMENT YEAR 2006-07, THE GP RATE WAS 10% WHEREAS IN ASSESSMENT YEAR 2007-08, THE ASSESSEE WA S IN LOSS. THE SALES OF THE ASSESSEE DURING ASSESSMENT YEAR 2007-08 WERE RS. 50,23,602/- AS AGAINST SALES OF RS. 23,68,888/- IN ASSESSMENT YEAR 2006-07. ELABORATE SUBMISSIONS WERE MADE BEFORE THE CIT(APPEALS) BY TH E ASSESSEE TO JUSTIFY THE GROSS LOSS SHOWN FOR THE YEAR UNDER CON SIDERATION, WHICH ARE INCORPORATED AT PAGES 8 TO 11 OF THE APPELLATE ORDE R. THE CIT(APPEALS) NOTED THAT THE ASSESSEE HAD DECLARED ADDITIONAL INC OME OF RS. 20,00,000/- ON ACCOUNT OF DISCREPANCIES IN STOCK AND OTHER DISC REPANCIES DETECTED DURING THE SURVEY. THE SAID ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE AFTER A WEEK OF THE DATE OF SURVEY I.E. ON 20.03.2007 AND AS SUCH, THE ASSESSEE WOULD HAVE WORKED OUT THE AMOUNT OF DISCREPANCIES DETECTED DURING THE SURVEY BY THAT TIME. BECAUSE O F THE SAID FACT, THE CIT(APPEALS) HELD THAT THE BOOKS OF ACCOUNT AND THE TRADING RESULTS DECLARED BY THE ASSESSEE WERE NOT RELIABLE, OTHERWI SE THERE WAS NO NEED TO DECLARE ANY ADDITIONAL INCOME 9. THE CIT(APPEALS) FURTHER FOUND DISCREPANCIES IN THE VARIOUS ACCOUNTS WHICH ARE TABULATED UNDER PARA (II) TO (VI I) AT PAGES 12 & 13 AND IN VIEW OF THE TOTALITY OF THE FACTS, THE REJECTION OF BOOKS OF ACCOUNT WAS UPHELD BY THE CIT(APPEALS). HOWEVER, THE CIT(APPEAL S) WAS OF THE VIEW THAT AS AGAINST THE DECLARED GP RATE OF 19.01% FOR THE PRECEDING YEAR, THE 6 GP RATE OF 20% WAS REASONABLE AS AGAINST 25% ADOPTE D BY THE ASSESSING OFFICER. ACCORDINGLY, THE GP RATE ESTIMATED BY THE ASSESSING OFFICER WAS RESTRICTED TO 20% AND THE ASSESSING OFFICER WAS DIRECTED TO WORK OUT GROSS PROFIT OF THE APPELLANT. THEREAFTER, THE CIT( APPEALS) HAS CONSIDERED THE ADDITION ON ACCOUNT OF ADDITIONAL INCOME OFFERE D BY THE ASSESSEE AS DEEMED INCOME UNDER SECTION 69 OF THE ACT. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF FAKIR MOHAMMED HAJI HASSAN 247 ITR 290 (GUJ) AND ALSO BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S KIM PHARMA PVT.LTD. V S CIT & ANOTHER IN ITA NO. 106 OF 2011, DATE OF ORDER 27.04.2011. THE RELEVANT EXTRACTS OF BOTH DECISIONS ARE REPRODUCED BY THE CIT(APPEALS) A T PAGES 14 TO 19 OF THE APPELLATE ORDER. IN VIEW OF THE RATIO LAID DOW N BY THE JURISDICTIONAL HIGH COURT, THE ADDITIONAL INCOME OF RS. 20 LACS DE CLARED BY THE ASSESSEE DURING THE SURVEY WAS ASSESSED AS DEEMED INCOME OF THE ASSESSEE AND NO SET OFF FROM THE SAID INCOME WAS ALLOWED. FURTHER ADDITION WAS UPHELD ON ACCOUNT OF THE LOOSE PAPERS FOUND DURING THE COU RSE OF SURVEY AND THE ORDER OF THE ASSESSING OFFICER IN THIS REGARD WAS U PHELD. 10. THE ASSESSEE IS IN APPEAL AGAINST THE AFORESAID ADD ITIONS I.E. FIRST THE REJECTION OF BOOKS OF ACCOUNT AND THE INVOKING OF PROVISIONS OF SECTION 145(3) OF THE ACT AND APPLICATION OF GP RAT E OF 20% VIDE GROUND NO. 1 & 2. FURTHER, VIDE GROUND NO. 3 THE ASSESSEE HAS RAISED THE ISSUE OF ADDITION UNDER SECTION 69 OF THE ACT AT RS. 20 L ACS. THE ASSESSEE HAS ALSO RAISED GROUND NOS. 4 TO 6 AGAINST THE ADDITION MADE ON ACCOUNT OF THE LOOSE PAPERS. 11. THE REVENUE IS ALSO IN APPEAL BEFORE US AGAINST THE ORDER OF CIT(APPEALS) IN RESTRICTING THE GP RATE OF 20% AND ALSO IN DELETING THE 7 ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F ENTRIES ON VARIOUS LOOSE PAPERS. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS CARRYING ON THE BUSINESS OF BRICK KILN AND DURING THE COURSE OF SURVEY CONDUCTED AT THE BUSINESS PREMISES OF THE AS SESSEE ON 13.03.2007, THE ASSESSEE SURRENDERED TOTAL INCOME OF RS. 20 LAC S OVER AND ABOVE ITS BOOK RESULTS. FURTHER DURING THE COURSE OF SURVEY, CERTAIN LOOSE DOCUMENTS WERE FOUND WHICH REFLECTED SALE OF BRICKS OUTSIDE THE BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FILED RETURN OF INCOME DECLARING NIL INCOME. THE CLAIM OF THE ASSESSEE WAS THAT IT WAS RUNNING INTO LOSSES DURING THE YEAR UND ER CONSIDERATION. HOWEVER, AFTER ADJUSTING THE SURRENDERED INCOME, TH E SAID LOSSES WERE CLAIMED AT NIL IN THE YEAR UNDER CONSIDERATION. THE ISSUE ARISING BEFORE US IS BOTH IN RESPECT OF THE ESTIMATION OF THE INCO ME IN THE HANDS OF THE ASSESSEE AFTER REJECTION OF BOOKS OF ACCOUNT AND TH E APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT AND ALSO AD DITION TO BE MADE ON ACCOUNT OF THE SURRENDERED INCOME OF RS. 20 LACS AN D ON ACCOUNT OF VARIOUS ENTRIES IN THE LOOSE PAPERS. ADMITTEDLY, TH E SAID LOOSE PAPERS WERE IN RELATION TO THE SALES OF BRICKS MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. ONCE THE ASSESSEE HAS SURRENDERE D ADDITIONAL INCOME ON ACCOUNT OF HIS BUSINESS AT RS. 20 LACS, WE FIND NO MERIT IN FURTHER ADDITION TO BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE NOTINGS ON LOOSE PAPERS, WHICH ADMITTEDLY WERE ON A CCOUNT OF SALE OF BRICKS OUTSIDE THE BOOKS OF ACCOUNT. NOW COMING TO THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A PPEALS), FIRST ON ACCOUNT OF REJECTION OF BOOKS OF ACCOUNT OF PROFIT AND ESTIMATION OF GP RATE IN THE HANDS OF THE ASSESSEE AND FURTHER ADDIT ION MADE UNDER SECTION 69 OF THE INCOME TAX ACT ON ACCOUNT OF SURRENDERED INCOME. THE 8 HON'BLE JURISDICTIONAL HIGH COURT IN KIM PHARMA (S UPRA) HAS CONSIDERED THE ISSUE AT LENGTH AND IN TURN FOLLOWING THE RATIO LAID DOWN BTHE HON'BLE GUJRAT HIGH COURT IN FAKIR MOHAMMED HAZI HASSAN (SU PRA) AND HELD THAT THE SURRENDERED INCOME IN THE HANDS OF THE ASSESSEE IS TO BE ASSESSED UNDER THE PROVISIONS OF SECTION 69 OF THE ACT. THE RELEVANT OBSERVATIONS OF BOTH THE HON'BLE GUJRAT HIGH COURT AND THE JURIS DICTIONAL HIGH COURT HAVE BEEN REPRODUCED BY THE CIT(APPEALS) AT PAGES 1 4 TO 19 OF THE APPELLATE ORDER AND WE MAKE A REFERENCE TO THE SAME BUT THE SAME ARE NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. 13. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRCUMST ANCES WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT(APPEALS) IN AS SESSING THE SURRENDERED INCOME OF RS. 20 LACS AS INCOME ASSESSA BLE UNDER SECTION 69 OF THE ACT. NOW COMING TO THE SECOND ASPECT OF THE ISSUE WHEREIN THE BOOKS OF ACCOUNT HAVE BEEN REJECTED, THE APPLICATIO N OF NET PROFIT RATE TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAVING SURRENDERED INCOME FROM BUSINESS BESIDES THE BOOK R ESULTS SHOWN, ESTABLISH THE CASE OF THE DEPARTMENT THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE CANNOT BE RELIED UPON AND THE SAME MERITS TO BE REJECTED. UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT, THE NE XT ISSUE WHICH ARISES IS THE APPLICATION OF NET PROFIT RATE TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE FROM BUSINESS. THE ASSESSEE HAD CL AIMED LOSSES ON ACCOUNT OF HIS BUSINESS DURING THE YEAR UNDER CONSI DERATION AND IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE RESTRICT THE SAID LOSS TO THE FIGURE OF NIL AND ON THE OTHER HAND, WE CONFIRM THE ADDITION ON ACCOUNT OF SURRENDERED INCOME OF RS. 20 LACS AS INCOME TO BE ASSESSED UNDER SECTION 69 OF THE ACT. ACCORDINGLY, WE DIREC T THE ASSESSING OFFICER TO DETERMINE THE TAX LIABILITY IN THE HANDS OF THE ASSESSEE ON ASSESSED INCOME OF RS. 20 LACS, WHICH HAVE BEEN ADM ITTED TO BE SO MADE 9 BY THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF HEARING OF THE APPEAL. IN VIEW THEREOF, THE GROUNDS OF APPEAL RAISED BY TH E ASSESSEE ARE PARTLY ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO DE TERMINE INCOME OF THE ASSESSEE AT RS. 20 LACS UNDER SECTION 69 OF THE ACT . THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THIS REGARD ARE THU S, DISMISSED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER,2013. SD/- SD/- ( T.R.SOOD) (SUSHMA CHO WLA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 23 RD DECEMBER,2013 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT,CHD.