ITO, Barnala V. M/s Krishna Cotton & Ginning Mills, Barnala

ITA 706/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95812 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.706 /CHD/2014 (ASSESSMENT YEAR : 2010-11) THE INCOME TAX OFFICER, VS. M/S KRISHNA COTTON BARNALA. & GINNING MILLS, GUNAS ROAD, TAPA DISTT., BARNALA. PAN: AAIFK3155A AND C.O.NO.40/CHD/2014 ARISING OUT OF ITA NO. 706/CHD/2014 (ASSESSMENT YEAR : 2010-11) M/S KRISHNA COTTON VS. THE INCOME TAX OFFICER, & GINNING MILLS, BARNALA. GUNAS ROAD, TAPA DISTT., BARNALA. PAN: AAIFK3155A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 12.10.2015 DATE OF PRONOUNCEMENT : 21.12.2015 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INC OME 2 TAX (APPEALS), PATIALA DATED 29.5.2014 FOR ASSESSME NT YEAR 2010-11. THE ASSESSEE HAS FILED CROSS OBJECTI ONS AGAINST THE SAME. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND TR ADING OF COTTON AND BINOLA. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED VARIOUS DISCREPANCIES IN THE BOOKS OF ACCOUNT AND PROPOSED TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND APP LIED GP RATE ON THE BASIS OF COMPARABLE CASES. THE BASIC ISSUE RAISED BY THE ASSESSING OFFICER WAS THAT NO PURCHAS E AND SALE BILLS IN RESPECT OF PURCHASES OF NARMA, COTTON , LOOSE, BINOLA AND BARDANA WERE PRODUCED. NO MONTH-WISE CONSUMPTION OF RAW MATERIAL USED IN THE MANUFACTURI NG OF FINISHED GOODS, PRODUCTION REGISTER OR DAY-TO-DAY A CCOUNT OF RECEIPT AND CONSUMPTION OF CONSUMABLES DEBITED T O TRADING ACCOUNT WAS PRODUCED AND NO DOCUMENTARY EVIDENCE FOR VALUING THE CLOSING STOCK OF BINOLA WA S FILED. THE ASSESSEE REPLIED TO THE ASSESSING OFFICER THAT THE PURCHASE AND SALE BILLS WERE DULY MAINTAINED AND PRODUCED AT THE TIME OF HEARING AND WERE FURTHER PR ODUCED FOR VERIFICATION. THE MONTH-WISE CONSUMPTION OF RA W MATERIAL WAS STATED TO HAVE BEEN SUBMITTED AND PRODUCTION REGISTER WAS ALSO SAID TO HAVE BEEN PROD UCED BEFORE THE ASSESSING OFFICER. IT WAS ALSO SUBMITTE D THAT 3 THE BINOLA HAS BEEN VALUED AT MARKET PRICE AND CONSUMPTION OF CONSUMABLES WERE SAID TO HAVE BEEN ENTERED IN THE BOOKS OF ACCOUNT AND WERE WITHIN THE REASONABLE LIMITS. AS REGARDS THE COMPARABLE CASE OF VINAYAK COTTON GINNING & GENERAL MILLS, THE ASSESSE E SUBMITTED THAT DUE DETAILS OF THE SAID CONCERN WAS NOT CONFRONTED TO IT. HOWEVER, ON THE BASIS OF ITS BAS IC KNOWLEDGE ABOUT THE CONCERN, IT WAS SUBMITTED THAT THE TURNOVER OF VINAYAK COTTON GINNING & GENERAL MILLS WAS ONLY RS.90 LACS COMPARED TO RS.11.8 CRORES IN THE C ASE OF THE ASSESSEE. FURTHER, IT WAS SUBMITTED THAT THE ELECTRICITY EXPENSES HAVE BEEN DEBITED TO THE PROFI T & LOSS ACCOUNT BY VINAYAK COTTON GINNING & GENERAL MILLS A ND NO LABOUR CHARGES HAVE BEEN CHARGED IN THAT CASE. ON THE BASIS OF MATCHING PRINCIPLE, EXCLUDING ELECTRICITY EXPENSES, THE GP RATE OF THE SAID CONCERN COMES TO 2.74% AND NOT 11.49%. THE ASSESSING OFFICER AGAIN CONTE NDED THAT THE ACCOUNT BOOKS, SUCH AS CASH BOOK, LABOUR GENERAL, DAY BOOK WERE NOT PRODUCED. SIMILARLY, ST OCK REGISTER, PRODUCTION REGISTER AND DAY-TO-DAY RECORD OF CONSUMPTION OF CONSUMABLES WERE NOT PRODUCED. THEREAFTER THE ASSESSING OFFICER CONTENDED THAT THE GP IN THE CASE OF BID COTTON & GINNING MILLS,, M/S AGGAR WAL COTTON & GENERAL MILLS AND M/S VINAYAK COTTON GINNI NG & GENERAL MILLS ARE DISCLOSED AT 3.42%, 3.49% AND 2.7 5% RESPECTIVELY AFTER CONSIDERING THE SALE AND PURCHAS E OF COTTON WASTAGE. THE ASSESSING OFFICER FURTHER NOT ED THAT IF THE ELECTRICITY EXPENSES ARE INCLUDED IN THE 4 MANUFACTURING ACCOUNT IN THE CASE OF THE ASSESSEE, THEN THE GP COMES TO 3.53%. CONSIDERING ALL THESE FACT S AFTER REJECTING THE BOOKS OF ACCOUNT, THE ASSESSING OFFIC ER APPLIED GP OF 5% AND MADE ADDITION ACCORDINGLY. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND SUBMITTED THAT THE COMPLETE BOOKS OF ACCOUNTS, BILLS, VOUCHERS AND ALL DESIRED INFORMATI ON AND DETAILS WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. EACH AND EVERY OBJECTION RAISED BY T HE ASSESSING OFFICER WAS DULY REPLIED TO BY THE ASSESS EE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THRO UGH A CHART, IT WAS EXPLAINED TO THE LEARNED CIT (APPEALS ) THAT THE GP RATE FOR ASSESSMENT YEAR 2008-09 WAS 1.67%. THERE WAS LOSS IN ASSESSMENT YEAR 2009-10 AND IN TH E CURRENT YEAR THE GP HAS RISEN TO 2.11%. STRONG OBJ ECTION WAS RAISED AGAINST THE ACTION OF THE ASSESSING OFFI CER IN REJECTING THE BOOKS OF ACCOUNT GETTING SUPPORT FROM A NUMBER OF JUDGMENTS. EACH AND EVERY OBJECTION RAIS ED BY THE ASSESSING OFFICER WAS AGAIN REPLIED TO THE LEAR NED CIT (APPEALS) WITH REFERENCE TO VARIOUS PAGES INDEXED T O THE PAPER BOOK FILED BEFORE THE LEARNED CIT (APPEALS). WITHOUT PREJUDICE, THE ASSESSEE ALSO MADE SUBMISSIO NS AGAINST THE GP RATE OF 5% ESTIMATED BY THE ASSESSIN G OFFICER. A CHART EXPLAINING THE COMPARISON OF THRE E CONCERNS TAKEN AS COMPARABLES BY THE ASSESSING OFFI CER I.E. BID COTTON & GINNING MILLS,, M/S AGGARWAL COTT ON & GENERAL MILLS AND M/S VINAYAK COTTON GINNING & GENE RAL 5 MILLS TOGETHER WITH THE RESULTS OF THE ASSESSEE COM PANY WAS MADE ON THE BASIS OF MATCHING CONCEPT OF ACCOUN TING PRINCIPLE AND IT WAS SHOWN THAT THE GP RATE IS 2.11 % IN THE CASE OF THE ASSESSEE, 2.53% IN BID COTTON & GE NERAL MILLS, 2.11% IN M/S AGGARWAL COTTON & GENERAL MILLS , WHILE IT WAS 2.75% IN M/S VINAYAK COTTON GINNING & GENERAL MILLS. IN THIS WAY, IT WAS SUBMITTED THAT THE ASSESSING OFFICER WAS WRONG IN TAKING THE GP RATE A T 5%. ANOTHER FACT BROUGHT TO THE NOTICE OF THE LEARNED C IT (APPEALS) WAS THAT THERE WAS THE CONTRADICTION IN T HE FINDINGS OF THE ASSESSING OFFICER REGARDING NON-PRO DUCTION OF BOOKS AND OTHER DETAILS. HE HIMSELF HAS OBSERVE D ON PAGE 2 OF HIS ORDER THAT THE BOOKS WERE DULY PRODUC ED AND WITH REFERENCE TO THE REPLY OF THE ASSESSEE FILED B EFORE HIM, ALL DETAILS WERE DULY PRODUCED BEFORE HIM. TH E LEARNED CIT (APPEALS) ASKED FOR THE COMMENTS OF THE ASSESSING OFFICER ON THIS. IN REPLY THE ASSESSING OFFICER IN HIS COMMENTS SUBMITTED THAT IN THE ASSESSMENT OR DER HE HAS NOT MENTIONED THAT THE COMPLETE BOOKS OF ACC OUNT WERE PRODUCED. HE HAS ONLY MENTIONED THAT THE BOOK S OF ACCOUNT ALONGWITH RELEVANT DOCUMENTS WERE PRODUCED, EXAMINED AND TEST-CHECKED. IT WAS FURTHER SUBMITTE D BY THE ASSESSING OFFICER THAT THE SALE BILLS FOR NARMA , COTTON, ETC. WERE PRODUCED WITH REPLY DATED 18.2.2013. FUR THER, IN THE REPORT, THE ASSESSING OFFICER ALSO COUNTERED THE SUBMISSIONS OF THE ASSESSEE MADE POINT-WISE ON THE OBJECTION RAISED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. 6 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT, THE LEARNED CIT (APPEALS) FORMED AN OPINION THAT THE ASSESSING OFFI CER HAS CORRECTLY REJECTED THE BOOKS OF ACCOUNT. HOWEVER, ON THE ISSUE OF ESTIMATION OF GP RATE, HE NOTED THAT IN ON E OF THE COMPARABLE CASES, I.E. M/S VINAYAK COTTON GINNING & GENERAL MILLS, THE TURNOVER IS RS.90 LACS, WHILE TH E TURNOVER OF THE ASSESSEE IS RS.11.8 CRORES. THEREF ORE, IT IS NOT A GOOD COMPARABLE. FURTHER, IN THE REMAND REPO RT THE ASSESSING OFFICER HAD SUBMITTED THAT THE GP RAT E OF M/S VINAYAK COTTON GINNING & GENERAL MILLS IS10.28% , WHICH WAS COUNTERED BY THE ASSESSEE THAT IN THIS CA SE, PROFIT FROM TRADING AT RS.5,60,028/- ALSO INCLUDED. THE LEARNED CIT (APPEALS) FOUND THE SUBMISSIONS OF THE ASSESSEE TO BE CORRECT AND HELD THAT THE CASE OF M/ S VINAYAK COTTON GINNING & GENERAL MILLS CANNOT BE CONSIDERED AS ONE OF THE COMPARABLES. AS REGARDS T HE OTHER COMPARABLES, I.E. BID COTTON & GENERAL MILLS, AND M/S AGGARWAL COTTON & GENERAL MILLS, THE GP IS STAT ED TO BE 3.24% AND 3.44% RESPECTIVELY. HOWEVER, ON THE B ASIS OF MATCHING PRINCIPLE EXCLUDING THE ELECTRICITY EXP ENSES FROM THE MANUFACTURING ACCOUNT, THE GP COMES TO 2.5 3% AND 2.11% RESPECTIVELY. LOOKING INTO THE TOTALITY OF THE FACTS, THE LEARNED CIT (APPEALS) FORMED AN OPINION THAT ADOPTING THE GP RATE OF 2.75% AGAINST 2.14% SHOWN B Y THE ASSESSEE WILL BE JUSTIFIED. IN THIS WAY, THE LEARN ED CIT (APPEALS) INCREASED THE GP RATE AS DECLARED BY THE ASSESSEE BY 0.61%. 7 5. AGGRIEVED BY THIS ORDER, BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE COME UP IN APPEAL BEFOR E US. THE ASSESSEE IS AGAINST THE ACTION OF THE ASSESSING OFFICER IN INCREASING THE GP RATE FROM 2.14% TO 2.75%, WHIL E THE DEPARTMENT IS IN APPEAL AGAINST THE ACTION OF THE L EARNED CIT (APPEALS) IN REDUCING THE GP RATE TAKEN BY THE ASSESSING OFFICER AT 5% TO 2.75%. 6. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT SINCE COMPLETE BOOKS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER AND BILLS OF BINOLA, ETC. WERE ALSO NOT SHOWN TO THE ASSESSIN G OFFICER IN VIEW OF THE FACT THAT THE ASSESSING OFFI CER HAS RECORDED VERY SPECIFIC OBJECTIONS IN THIS REGARD. THE ASSESSING OFFICER WAS RIGHT IN REJECTING THE BOOKS OF ACCOUNT. AS REGARDS EXCLUSION OF M/S VINAYAK COTTO N GINNING & GENERAL MILLS FROM THE COMPARABLES, IT WA S SUBMITTED THAT THE TURNOVER BEING LESSER THAN THE ASSESSEE DOES NOT EFFECT THE RATE OF GP AND, THEREF ORE, THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN REDUCING THE GP RATE TAKEN BY THE ASSESSING OFFICER. 7. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE ARGUING BEFORE US SUBMITTED A COPY OF THE ORDER SHE ET OF THE ASSESSMENT PROCEEDINGS, WHEREBY HE DREW OUR ATTENTION TO THE FACT THAT THE BOOKS OF ACCOUNT, BI LLS AND VOUCHERS, ETC. WERE DULY PRODUCED BEFORE THE ASSESS ING OFFICER. FURTHER, IT WAS SUBMITTED THAT THE ASSESS EE IS MAINTAINING PROPER BOOKS OF ACCOUNT AND THE BOOKS O F 8 ACCOUNT ARE BEING DULY AUDITED BY THE AUDITORS. AS REGARDS QUANTITATIVE TALLY OF THE PRINCIPLE ITEMS, IT WAS STATED THAT THESE ITEMS TOGETHER WITH CLOSING STOCK ARE REFLECTED IN THE MANUFACTURING AND TRADING ACCOUNT AND THE DETAILS ARE APPEARING IN THE TAX AUDIT REPORT A T PAPER BOOK PAGE 9 FILED BY THE ASSESSEE. THE ASSESSEE IS MAINTAINING STOCK REGISTER, WHICH WAS PRODUCED BEFO RE THE ASSESSING OFFICER AND VERIFIED BY HIM. THE MONTH- WISE DETAILS OF NARMA CONSUMPTION, GINNING COTTON AND BI NOLA WERE ALSO GIVEN TO HIM, WHICH WERE ALSO PLACED IN T HE PAPER BOOK PAGES 22 TO 26. THE COPY OF STOCK REGIS TER WAS ALSO BROUGHT ON RECORD. AS REGARDS OTHER OBJECTION S RAISED BY THE ASSESSING OFFICER WHILE REJECTING THE BOOKS OF ACCOUNT, IT WAS STATED THAT DETAILED REPLY WAS F ILED, WHICH IS REPRODUCED BY THE ASSESSING OFFICER IN HIS ORDER AT PAGES 6 TO 30, FROM WHICH IT IS VERY CLEAR THAT EACH AND EVERY THING INCLUDING STOCK REGISTER, PURCHASE & SA LE VOUCHERS AND BOOKS OF ACCOUNT HAD BEEN PRODUCED. I N THIS VIEW, IT WAS PRAYED THAT THE ACTION OF THE ASS ESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT HELD TO B E NOT AS PER LAW. AS REGARDS THE GP RATE APPLIED BY THE ASS ESSING OFFICER AT 5%, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN ONLY THOSE COMPARABLES WHICH FAVOURED HIM AND HAS NOT CONSIDERED THE SUBMISSIONS MADE BY THE ASSE SSEE IN THIS REGARD IN RIGHT PERSPECTIVE. EVEN THE ACTI ON OF THE LEARNED CIT (APPEALS) IN CONSIDERING THE GP RATE AT 2.7% IS WHOLLY MIS-CONCEIVED AND DESERVES TO BE IGNORED. IN THIS WAY, A PRAYER WAS MADE TO HOLD THE REJECTION O F BOOKS 9 OF ACCOUNT NOT AS PER LAW AND UPHOLDING THE GP RATE TAKEN BY THE ASSESSEE AS THE CORRECT GP. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN REJECTED BY THE ASSESSING OFFICER AND THEREAFTER A GP RATE OF 5% WA S APPLIED. THERE ARE A NUMBER OF ALLEGATIONS LEVIED UPON BY THE ASSESSING OFFICER, ON THE BASIS OF WHICH, THE B OOKS WERE REJECTED. THE ASSESSEE HAS TRIED TO SATISFY T HE LOWER AUTHORITIES, BOTH BEFORE THE ASSESSING OFFICER AS W ELL AS THE LEARNED CIT (APPEALS) IN THIS REGARD. EVEN BEF ORE US, ELABORATE SUBMISSIONS WERE MADE IN THIS REGARD. ON E OF THE MAIN CONTENTION OF THE ASSESSING OFFICER WAS TH AT THE BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE HIM. HOW EVER, WE SEE THAT IN HIS ORDER AT PAGE 2, HE HIMSELF HAS MENTIONED THAT THE BOOKS OF ACCOUNT ALONGWITH THE RELEVANT DOCUMENTS WERE ALSO PRODUCED, EXAMINED & T EST CHECKED. EVEN FROM THE COPY OF ORDER SHEET FILED B EFORE US, THIS FACT GETS CONFIRMED. THE COMMENTS GIVEN B Y THE ASSESSING OFFICER IN HIS REMAND REPORT THAT THE BOO KS, THOUGH PRODUCED, WERE ONLY TEST CHECKED IS NOT OF A NY CONSEQUENCE. ONCE THE BOOKS WERE PRODUCED BEFORE H IM, IT WAS HIS TASK TO CHECK THEM, IN WHATEVER MANNER H E WANTS TO CHECK THOSE. 9. AS REGARDS THE OBJECTION OF THE ASSESSING OFFIC ER 10 THAT THE PURCHASE AND SALE BILLS OF NARMA, COTTON L OOSE, BINOLA AND BARDANA WERE NOT PRODUCED, WE SEE FROM T HE LETTER DATED 18.2.2013 FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WHICH WAS PLACED AT PAPER BOOK PA GE 28 FILED BEFORE US, WE OBSERVE THAT AT POINT 3(A), THE ASSESSEE MENTIONED THAT ALL THE PURCHASE AND SALES BILLS AR E DULY MAINTAINED AND WERE PRODUCED AT THE TIME OF HEARING . HOWEVER, PURCHASE AND SALE BILLS OF NARMA, COTTON L OOSE, BINOLA AND BARDANA ARE AGAIN PRODUCED FOR YOUR VERIFICATION. AFTER PERUSING THIS REPLY, WE DO NO T UNDERSTAND, WHAT ELSE THE ASSESSING OFFICER WANTED THE ASSESSEE TO PRODUCE? IF HE WAS NOT SATISFIED WITH THESE, HE COULD HAVE GONE AHEAD AND ASKED THE ASSESSEE WHA T ELSE HE WANTED. ANOTHER OBJECTION, THE ASSESSING O FFICER HAD, WHILE REJECTING THE BOOKS OF ACCOUNT IS THAT T HE ASSESSEE HAS NOT PRODUCED THE STOCK REGISTER. ON P ERUSAL OF THE SAME REPLY DATED 18.2.2013, WE SEE THAT AT P OINT NO.3(C) THE ASSESSEE HAS STATED THAT WE ARE MAINTAI NING STOCK-CUM-PRODUCTION REGISTER OF THE BINOLA, COTTON OF DIFFERENT QUALITY AND WHICH IS PRODUCED FOR YOUR VERIFICATION. IT IS QUITE CLEAR FROM THIS THAT THE STOCK REGISTER WAS IN FACT PRODUCED BEFORE THE ASSESSING OFFICER. A COPY OF THE STOCK REGISTER WAS ALSO FILED BEFORE US, WHEREBY WE OBSERVE THAT A REGISTER MAINTAINING THE OPENING BALANCE, RECEIPT AND DISPATCH QUANTITY-WISE OF EVERY ITEM WAS BEING MAINTAINED. 10. ANOTHER OBJECTION WAS THAT DAY-TO-DAY RECORD O F 11 CONSUMPTION OF CONSUMABLES DEBITED TO TRADING/PROFI T & LOSS ACCOUNT WAS NOT PRODUCED FOR VERIFICATION. IN THIS REGARD, IN THE SAME REPLY FILED WITH THE ASSESSING OFFICER THE ASSESSEE HAD STATED THAT THE CONSUMPTION OF CONSUMABLE STORE IS DULY ENTERED IN THE BOOKS OF AC COUNT AND WITHIN REASONABLE LIMIT. FURTHER, BEFORE THE L EARNED CIT (APPEALS), IT WAS STATED THAT THERE IS NO CONSU MABLES EXCEPT EXPENSES FOR CLOTH AND PATTI USED FOR PRESSI NG AND PACKING COTTON BALES. ALL PURCHASE OF PATTI AND CL OTH ARE SUPPORTED BY BILLS AND VOUCHERS AND THEIR STOCK REG ISTER CANNOT BE MAINTAINED DUE TO PRACTICAL POINT OF VIEW . THE ASSESSING OFFICER OR THE LEARNED CIT (APPEALS), IF WERE NOT SATISFIED WITH THESE REPLIES, THEY COULD HAVE MADE FURTHER ENQUIRIES. 11. FURTHER, THE ASSESSING OFFICER MENTIONS THAT T HE ASSESSEE HAS SHOWN CLOSING VALUE OF BINOLA WASTAGE IN VALUE AND HAD NOT FILED ANY QUANTITATIVE DETAILS OF BINOLA WASTAGE. AT THE SAME TIME, HE OBSERVES THAT IN THE DETAILS OF STOCK STATEMENT FURNISHED BY THE ASSESSEE, THERE IS NO ACCOUNT OF BINOLA WASTAGE. THEREFORE, CLOSING VALU E OF BINOLA IS NOT VERIFIABLE. HERE THE ASSESSING OFFIC ER IS CONTRADICTING HIMSELF, HE ACCEPTS THE FACT THAT STO CK STATEMENTS HAVE BEEN FILED BY THE ASSESSEE. IN THI S REGARD, THE EXPLANATION OF THE ASSESSEE WAS THE BIN OLA WASTAGE IS OBTAINED IN THE COURSE OF PRODUCTION OF COTTON AND BINOLA. AT PAGE 9 OF THE PAPER BOOK, WE SEE TH AT THE QUANTITATIVE DETAILS IN THIS REGARD ARE CONTAINED. IN THIS 12 WAY, YIELD OF FINISHED GOODS @ 99.29% AND BINOLA SHORTAGE/WASTAGE IS SHOWN TO BE MERELY 0.71%. 12. ANOTHER OBJECTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAD DECLARED 2.14% GP RATE OVER A TURNOVER OF RS.11,80,26,243/-, WHICH IS ON THE LOWE R SIDE AS COMPARED TO OTHER COMPARABLE ENTITIES. IN THIS REGARD, THE ASSESSEE HAD FILED A DETAILED WORKING OF GP DEC LARED BY THESE VARIOUS CONCERNS ON THE MATCHING COST PRI NCIPLE. 13. THE LAST OBJECTION OF THE ASSESSING OFFICER IS THAT THE YIELD ON COTTON IN ASSESSEES CASE IS LOWE R AS COMPARED TO THE OTHERS. THE SAID AVERMENT OF THE ASSESSING OFFICER IS NOT BACKED BY ANY QUANTITATIVE ANALYSIS OR ANY OTHER DATA. THE ASSESSEE HAD FILE D A CHART SHOWING COMPARATIVE YIELD OF THE COMPARABLE ENTITIES AS WELL AS ITS OWN WHICH IS PLACED AT PAPE R BOOK PAGE 46. THE COTTON YIELD OF ASSESSEE COMES TO 34 .82%, WHICH THE SAME FOR COMPARABLE ENTITIES, WHICH ARE 34.87%, 25.05% AND 31.90%. THE YIELD OF BINOLA IN ASSESSEES CASE IS 64.47%, WHILE IN COMPARABLE CASE S IT IS 63.20%, 63.15% AND 66.00%. 14. AFTER CONSIDERING THE MERITS OF THE CASE AS ABOVE, WE OBSERVE THAT FOR REJECTING THE BOOKS OF A CCOUNT THE ASSESSING OFFICER RAISED MANY OBJECTIONS WHICH WERE DULY REPLIED TO BY THE ASSESSEE. THE DETAILS WERE BEING DULY PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BUT THE ASSESSING OFFICER 13 WITHOUT ANALYZING THE DETAILS AND EXPLANATION FILED BY THE ASSESSEE, KEPT ON REPEATING THAT THE DETAILS OR FOR THAT MATTER BOOKS OF ACCOUNT ARE NOT BEING PRODUCED BY T HE ASSESSEE. WE DO NOT SEE IT AS A CORRECT APPROACH O F THE ASSESSING OFFICER. HE SHOULD HAVE GONE AHEAD AND ANALYZE THE SUBMISSIONS AND QUANTITATIVE DETAILS FI LED BY THE ASSESSEE AND THEN COULD HAVE COME TO A CONCLUSI ON TO REJECT THE BOOKS OF ACCOUNT. IT APPEARS AS IF HE WAS PREDETERMINED TO REJECT THE BOOKS OF ACCOUNTS. WE FURTHER OBSERVE THAT THE LEARNED CIT (APPEALS), ALSO WITHOU T COMMENTING ON THE EXPLANATION OF THE ASSESSEE, IN J UST ONE SENTENCE CONFIRMED THE REJECTION OF BOOKS OF AC COUNT. NOWHERE, HE HIMSELF TRIED TO PERUSE THE EXPLANATION AND EVIDENCES SUBMITTED BY THE ASSESSEE. 15. IN VIEW OF THE ABOVE, WE ARE INCLINED TO HOLD THE ACTION OF THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNT AS BAD AND DIRECT HIM TO ACCEPT THE BOOKS O F THE ASSESSEE. IN VIEW OF THE FINDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE BE ACCEPTED, WE DO NOT FIND ANY NEE D TO GO INTO THE QUESTION OF GP RATE. 16. ANOTHER GROUND RAISED BY THE ASSESSEE IN HIS CROSS OBJECTION IS WITH REGARD TO ELECTRICITY EXPEN SES, FOR WHICH NO ARGUMENTS WERE MADE DURING THE COURSE OF HEARING. 17. FROM THE PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE SEE THAT THE ASSESSING OFFICER DISA LLOWED 14 ELECTRICITY EXPENSES AS THE SAME WERE NOT VERIFIABL E IN THE ABSENCE OF SUPPORTING DOCUMENTS. THE LEARNED CIT (APPEALS) CONFIRMED THE SAID ACTION OF THE ASSESSIN G OFFICER. EVEN BEFORE US, NO PLEADINGS AGAINST THIS WAS MADE, NOR ANY SUPPORTING EVIDENCE FOR THE ELECTRICI TY EXPENSES WERE SHOWN TO US. IN VIEW OF THIS, WE UPH OLD THE ORDER OF THE LEARNED CIT (APPEALS) IN THIS REGARD A ND CONFIRM THE DISALLOWANCE. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT A NO.706/CHD/2014 IS DISMISSED AND CROSS OBJECTIONS F ILED BY THE ASSESSEE IN C.O.NO.40/CHD/2014 IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF DECEMBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST DECEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH