M/S. SARAF SEASONING UDHYOG, CHURU V. ASSISTANT COMMISSIONER OF INCOME, JHUNJHUNU

ITA 775/JPR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3303 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Keywords: Rejection of books of accounts; Question of law
• Section: 145

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA- @ ITA NO. 775/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 M/S SARAF SEASONING UDHYOG RIICO INDUSTRIAL AREA, SARDARSHAHAR, CHURU. CUKE VS. THE ACIT, CIRCLE, JHUNJHUNU. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAEFS 1613 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SURESH OJHA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI KARNI DAN (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/02/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 13/02/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21.08.2017 OF THE LD. CIT (A), JAIPUR FOR THE ASSES SMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS AS UN DER:- 1. THAT THE ORDER PASSED BY THE COMMISSIONER OF IN COME-TAX (APPEALS)-III JAIPUR IS ILLEGAL AND AGAINST THE LAW . 2. THAT THE ORDER PASSED BY THE COMMISSIONER OF INC OME-TAX (APPEALS) IS AGAINST THE JUDICIAL DECORUM AND DISCI PLINE BECAUSE ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 2 THE JUDGMENT OF SUPREME COURT REFERRED IN 247 CTR P AGE 353 WAS NOT FOLLOWED BY THE AO AS WELL AS BY THE CIT (A ). 3. THAT THE C.I.T (A) SHOULD HAVE FOLLOWED THE ORDE R HON.BLE TRIBUNAL DELIVERED IN THE CASE OF M/S. COSMOPOLITAN TRADING CORPORATION REPORTED IN 14 ITD 327 SPECIAL BENCH, B ECAUSE THIS ORDER IS HAVING THE CHARACTER OF BINDING NATURE REL IED BY A.O. IN SUBMISSION. 4. THAT THE ORDER PASSED BY THE COMMISSIONER OF INC OME TAX (APPEALS) , MAY KINDLY BE DECLARED AGAINST JUDICIAL DECORUM AND JUDICIAL DISCIPLINE BECAUSE HE FAILS TO FOLLOW THE JUDGMENT OF HIGH COURT/ TRIBUNAL REFERRED IN WRITTEN SUBMISSION, WHI CH NEITHER NOT STAY NOR REVERSED. 5. THAT THE APPLICATION OF PROVISION OF SECTION 145 (3) OF THE INCOME-TAX ACT SUSTAIN BY THE CIT (A) IS ILLEGAL AN D AGAINST THE LAW. 6.THAT THE ORDER PASSED BY THE C.I.T. (A) IS ILLEGA L BECAUSE THE C.I.T. (A) IGNORED THE WRITTEN SUBMISSION IN RESPEC T OF MAINTENANCE OF BOOKS OF ACCOUNT AND VOUCHERS. 7. THAT THE ASSESSING OFFICER UTILIZED THE CASE LAW BEHIND THE BACK, THEREFORE, THE UTILIZATION OF THE CASE LAW AG AINST THE ASSESSEE IS ILLEGAL AND AGAINST THE LAW. 8. THAT THE C.I.T. (A) SHOULD HAVE DECIDED THE EACH GROUNDS OF MEMO OF APPEAL AS PER THE JUDGMENT OF HON'BLE RAJAS THAN HIGH COURT REPORTED IN 249 ITR 323 WHERE AS GROUND NO & NOT DECIDED. ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 3 FURTHER THE ARGUMENTS WERE NOT APPRECIATED, WHICH S HOULD HAVE DECIDED AS PER LAW. 9. WITHOUT PREJUDICE TO ABOVE THE ADDITION MADE BY THE ASSESSING OFFICER IS EXCESSIVE AND HIGH. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED I N THE BUSINESS OF MANUFACTURING AND SALES OF WOODEN FURNITURE/ITEMS. THE ASSESSE FILED ITS RETURN OF INCOME ON 30.09.2010 DECLARING TOTAL INCOME OF RS. 33,82,170/-. DURING THE YEAR UNDER CONSIDERATION TH ERE WAS DECLINE IN G.P. RATE IN COMPARISON TO THE PRECEDING YEARS. THE ASSESSEE EXPLAINED THE REASONS FOR FALL IN THE GP RATE AS RISE IN THE COST OF RAW MATERIAL BEING TIMBER. THE AO NOTED THAT THE ASSESSEE HAS N OT BEEN MAINTAINING STOCK REGISTER, DAY TO DAY DETAILS AND CONSUMPTION OF MATERIALS. FURTHER, VOUCHERS OF EXPENSES WERE NOT P RODUCED FOR VERIFICATION, MANUFACTURING DETAILS WERE ALSO NOT M AINTAINED AND CONSOLIDATED FIGURES OF CLOSING STOCK WERE FILED BU T NO SUPPORTING DETAILS FILED FOR VERIFICATION OF CORRECTNESS OF THE STOCK. THE AO THEN PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE BASIS OF THESE DEFECTS BY INVOKING THE PROVISIONS OF SECTION 145(3 ) OF THE ACT. CONSEQUENTLY, THE AO ESTIMATED THE INCOME OF THE AS SESSEE BY TAKING THE GROSS PROFIT RATE AT 15% AS AGAINST THE GROSS P ROFIT DECLARED BY THE ASSESSEE AT 14.29%. THE ASSESSING OFFICER HAS CONSI DERED THE G.P. OF ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 4 THE PRECEDING YEAR AT 16.49% AND THEREFORE, APPLIED AT 15% G.P. AS REASONABLE AND CONSEQUENTLY THE AO MADE AN ADDITION OF RS. 3,43,718/- . THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFO RE THE LD. CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE FILED THE WRITTEN SUBMISSIONS ALONG WITH A FFIDAVIT OF THE PROPRIETOR OF THE ASSESSEE. THUS, THE EVIDENTORY VA LUE OF THE AFFIDAVIT CANNOT DENIED IN THE ABSENCE OF ANY CROSS EXAMINE B Y THE AO. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE AFFIDAVIT FILED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED WHEN THE AO HAS NOT DECID ED TO CROSS EXAMINE THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION IN CASE OF LAXMI ELECTRONIC CORPORATION LIMITED VS. CIT 188 ITR 398 AND SUBMITTED THAT WHEN THE ASSESSEE R ELIED UPON THE VARIOUS DECISIONS BEFORE THE LD. CIT(A) WHICH WERE NOT CONSIDERED WHILE PASSING THE IMPUGNED ORDER THEN THE ORDER OF THE LD . CIT(A) IS NOT SUSTAINABLE IN LAW. ONCE, THE AO HAS NOT CALLED FOR THE CROSS EXAMINATION OF THE ASSESSEE ON THE CONTENTS OF THE AFFIDAVIT THEN THE AFFIDAVIT IS ACCEPTED. IN SUPPORT OF HIS CONTENTION , HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF MEHTA PARIK AND CO. VS. CIT 30 ITR 181. FURTHER, THE LD. AR OF THE ASSESSEE HA S SUBMITTED ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 5 THAT THE ASSESSEE HAS EXPLAINED THE REASONS FOR THE DECLINE IN THE G.P. RATE AS INCREASE OF COST OF RAW MATERIAL BEING TIMB ER. THE TURNOVER OF THE ASSESSEE IS SUBSTANTIALLY HIGHER THAN THE EARLI ER YEAR HENCE, THE MARGINAL DECLINED IN THE G.P. RATE CANNOT BE A REAS ON FOR REJECTION OF BOOKS OF ACCOUNT. HE HAS RELIED UPON THE DECISION O F SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF ACIT VS. M/S CASMO POLITIAN TRADING CORPORATION 14 ITD 327 AND SUBMITTED THAT THE SPECIAL BENCH HA S HELD THAT THERE ARE 5 INGREDIENT OF THE TRADING ACC OUNT AND IF 4 INGREDIENT OUT OF 5 HAVE BEEN ACCEPTED THEN, 5 TH INGREDIENT CANNOT BE DENIED. THE LD. AR HAS THUS SUBMITTED THAT WHEN ALL OTHER INGREDIENTS BEING OPENING STOCK, PURCHASE AND SALE ARE ACCEPTED THE CLOSING STOCK CANNOT BE REJECTED BY THE AO. HENCE, HE HAS SUBMITT ED THAT THE AO HAS WRONGLY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESS EE. THE DECISIONS OF THE HONBLE SUPREME COURT, HIGH COURTS AND SPECIAL BENCHE ARE BINDING UPON THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A ), THEREFORE, NOT FOLLOWING THE DECISION IS IN VIOLATION OF JURISDICT IONAL DISCIPLINE AND DECORUM. THE LD. AR OF THE ASSESSEE HAS FURTHER SUB MITTED THAT THE ASSESSEE HAS BEEN MAINTAINING ALL THE VOUCHERS OF P URCHASE AND INVENTORY OF CLOSING STOCK WHICH WRE PRODUCED BEFOR E THE AO, THEREFORE, THE REJECTION OF BOOKS OF ACCOUNTS IS ILLEGAL AND A GAINST THE LAW. THE ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 6 SALES DURING THE YEAR HAS INCREASED FROM 2.58 CRORE S TO 4.88 CRORES HENCE, NO TRADING ADDITION IS CALLED FOR. 4. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE AO HAS GIVEN THE SPECIFIC REASONS FOR REJECTION OF BOOKS OF ACCO UNTS AND THEREAFTER THE ASSESSING OFFICER HAS CONSIDERED THE G.P. RATE DECLARED BY THE ASSESSEE IN THE PRECEDING YEAR @ 16.49% AND APPLIED THE G.P. AT 15% FOR ESTIMATING THE INCOME OF THE ASSESSEE IN THE YE AR UNDER CONSIDERATION WHICH IS REASONABLE AND PROPER HAVING REGARD TO THE PAST HISTORY OF THE GP RATE DECLARED BY THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE NOTE THAT THAT THE ASSESSEE IS HAVING GRIEVANCE AGAINST THE REJECTION OF THE BOOKS OF ACCOUNTS AND CONSEQUENTLY TRADING ADDITION MADE BY THE AO. THE LD. AR OF THE ASSESSEE HAS GIVEN MUCH STRESS ON THE POINT THAT THE ORDER OF THE LD. CIT(A ) AND AO IS ILLEGAL AS THEY HAVE NOT FOLLOWED THE DECISIONS RELIED UPON TH E ASSESSEE. HENCE, IT IS A CASE OF JUDICIAL INDISCIPLINE ON THE PART OF T HE LD. CIT(A) AS WELL AS AO. WE FIND THAT THIS CASE IS NOT INVOLVING ANY LEG AL ISSUE BUT IT IS PURELY FACTUAL IN NATURE, THEREFORE, THE CASE LAW AS RELIE D UPON BY THE ASSESSEE CANNOT BE APPLIED WITHOUT EXAMINATION OF THE RELEVA NT FACTS AND ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 7 CIRCUMSTANCES. THERE IS NO DISPUTE THAT DURING THE YEAR UNDER CONSIDERATION THE GP RATE DECLARED BY THE ASSESSEE IS 14.29% IN COMPARISON TO THE GP FOR THE PRECEDING YEAR AT 16.4 9%. THEREFORE, THE AO PROCEEDED TO EXAMINE THE CORRECTNESS OF THE BOOK S OF ACCOUNTS AND FOUND THAT THE ASSESSEE IS NOT MAINTAINING THE REQU ISITE RECORD PARTICULARLY STOCK REGISTER AS WELL AS OTHER DETAIL S OF CONSUMPTION OF MATERIALS. THE ASSESSING OFFICER HAS GIVEN THE REAS ONS FOR REJECTING THE BOOKS OF ACCOUNTS AS UNDER:- 1. NO STOCK REGISTER WAS MAINTAINED. 2. NO DAY TO DAY DETAILS OF CONSUMPTION OF MATERIA L ARE KEPT. 3. VOUCHERS OF EXPENSES WERE NOT PRODUCED FOR VERI FICATION. 4. NO MANUFACTURING DETAILS WERE FOUND TO BE MAINT AINED. 5. CONSOLIDATED FIGURES OF CLOSING STOCK WERE FILED BUT NO SUPPORTING DETAILS FILED TO VERIFY THE CORRECTNESS OF FIGURES STOCK SHOWN. WE FIND THAT NON MAINTAINING STOCK REGISTER AND DAY TO DAY CONSUMPTION REGISTER IN CASE OF MANUFACTURING ACTIVITY IS SERIO US LAPSE AND DEFECTS IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. T HEREFORE, IN VIEW OF THE SETTLED PROPOSITION OF LAW WHEN THE CLOSING STO CK CANNOT BE PROPERLY VALUED IN THE ABSENCE OF THE NECESSARY DETAILS AND MAINTAINING OF STOCK REGISTER THEN, THE CORRECTNESS OF THE BOOKS RESULTS CANNOT BE VERIFIED. ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 8 HENCE, WE FIND THAT THE DEFECTS POINTED OUT BY THE AO ARE SERIOUS IN NATURE AND SUFFICIENT FOR REJECTING THE BOOK RESULT S BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE LD. CI T(A) HAS CONSIDERED THIS ISSUE IN PARA 4.3 IS PRODUCED AS UNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE MATERIAL BEFOR E ME. I FIND THAT AO POINTED OUT THE FOLLOWING DEFECTS IN THE BO OKS OF ACCOUNTS:- 1. NO STOCK REGISTER WAS MAINTAINED. 2. NO DAY TO DAY DETAILS OF CONSUMPTION OF MATERIA L ARE KEPT. 3. VOUCHERS OF EXPENSES WERE NOT PRODUCED FOR VERI FICATION. 4. NO MANUFACTURING DETAILS WERE FOUND TO BE MAINT AINED. 5. CONSOLIDATED FIGURES OF CLOSING STOCK WERE FILED BUT NO SUPPORTING DETAILS FILED TO VERIFY THE CORRECTNESS OF FIGURES STOCK SHOWN. IN ABSENCE OFSUCH DETAILS AND SEPARATE ACCOUNTS, TH E RESULTS DECLARED BY THE ASSESSEE CANNOT BE TREATED AS RELIA BLE. THIS FACT IS ALSO SUPPORTED BY FOLLOWING DECISION. (A) THE HON'BLE SUPREME COURT IN THE CASE OF S.N. SAMASIVAYAM CHETTAIR 38 ITR 579 HAS HELD THAT KEEPI NG OF STOCK REGISTER IS OF GREAT IMPORTANCE BECAUSE IT THE MEAN S OF VERIFICATION OF ASSESSEE'S ACCOUNT. AFTER TAKING IN TO ACCOUNT WILL MATERIAL FACTS, INCLUDING THE WANT OF STOCK REGISTE R IT IS FOUND THAT PROPER PROFIT IS NOT DEDUCTIBLE APPLICABLE OF PROVI SION OF SECTION 145 IS JUSTIFIED. (B) THE HON'BLE BOMBAY HIGH COURT IN CASE OF BASTI RAM NARAYAN DAS MAHESHWARI VS C1T, REPORTED IN 210 ITR PAGE 438 HAS HE THAT NON MAINTENANCE OF DAY TO DAY ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 9 CONSUMPTION REGISTER CAN LEAD TO REJECTION OF BOOKS OF ACCOUNT ACCORDING TO THE PROVISIONS OF SECTION 145 OF THE I NCOME-TAX ACT. IN THE PRESENT CASE ALSO THE ASSESSEE HAS NOT MAINT AINED DAY TO DAY RECORD OF CONSUMPTION OF MATERIAL. NO PROPER RE CORDS RELATED TO SITES ARE MAINTAINED OUT OF WHICH TRUE AND PROPE R INCOME COULD HAVE DEDUCED. KEEPING IN VIEW ALL THE FACTS AND THAT NO SEPARATE STOCK REGISTER ON ITEM WISE BASIS HAS BEEN MAINTAINED NOR HAS DAY TO DAY CONSUMPTION DETAILS BEEN MAINTAINED. IN ABSENCE OF SUCH QUANTITATIVE DETAILS OF EACH ITEMS, TRADING RESULTS DECLARED BY THE ASSESSEE ARE NOT ACCEPTABLE AND PROVISION OF SE CTION 145(3) ARE HEREBY INVOKED. THE A/R OF THE APPELLANT IN HIS SUBMISSION DID NOT TOUCH THESE DEFECTS POINTED OUT BY THE AO IN THE BOOKS OF ACCOU NTS. THEREFORE CONSIDERING THE DEFECT POINTED OUT BY THE AO IN ASSESSMENT ORDER AND CITED CASE LAW. I AM THE VIEW THAT TRADING RESULT SHOWN BY THE APPELLANT ARE NOT TRUE AND CORR ECT. THEREFORE I CONFIRM THE ACTION OF THE TO REJECTED T HE BOOKS OF ACCOUNTS BY APPLYING PROVISION U/S 145(3) OF THE I. T. ACT. THUS, THE NON MAINTENANCE OF STOCK REGISTER AS WELL AS DETAILS OF CONSUMPTION WOULD ATTRACT THE PROVISIONS OF SECTION 145(3) OF THE ACT. WE FURTHER NOTED THAT THE CONTENTION OF THE ASSESSE E BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE US IS ONLY TO E XPLAIN THE REASONS FOR DECLINED IN THE GP AND NOWHERE DISPUTED THE DEF ECTS POINTED OUT BY THE AO REGARDING NON MAINTENANCE OF STOCK REGIST ER AND DETAILS OF ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 10 THE DAY TO DAY CONSUMPTION IN THE MANUFACTURING ACT IVITY OF THE ASSESSEE. THE AFFIDAVIT AS RELIED BY THE LD. AR REA DS AS UNDER:- I BRIJMOHAN SARAF S/O SHIVPARSAD SARAF AGED 58 RES IDENT OF SARDARSAHAHAR DECLARED AS ON OATH AS UNDER:- THAT I AM PARTNER OF M/S SARAF SEASONING UDYOG AND FULLY CONVERSANT WITH THE BUSINESS AFFAIRS AS WELL AS TAX ATION AFFARIS. THAT THE PURCHASES AND SALES OF THE FIRM IS FULLY V OUCHED AND EXPENSES ARE ALSO VOUCHED INCLUDING INTERNAL VOUCHE RS SO PREPARED. THAT THE FALL IN THE GP IS ON ACCOUNT OF RISE IN RA W MATERIAL THAT IS TIMBER ETC. THAT DURING THE YEAR 01.04.2009 TO 31.03.2010 THAT IS FOR THE ASSESSMENT YEAR 2010-11 THERE IS RISE IN THE GENERA L PRICE INDEX WHICH EFFECTED THE RATE OF PROFIT. WHAT HAS BEEN STATED ABOVE IS TRUE TO THE BEST OF M Y KNOWLEDGE NOTHING HAS BEEN CONCEALED. SO GOD MAY HELP ME. THUS, IT WAS SUBMITTED BY THE ASSESSEE IN THE AFFID AVIT THAT THE PURCHASE, SALE AND EXPENSES INCURRED BY THE ASSESSE E ARE SUPPORTED BY THE VOUCHERS WHICH INCLUDES INTERNAL VOUCHERS. EVEN AS PER THE AFFIDAVIT ITSELF THE ASSESSEE HAS ACCEPTED THE VOUCHERS ARE S ELF MADE. SECONDLY THE REASONS FOR FALL IN THE G.P. IS ON ACCOUNT RISE IS A RAW MATERIAL COST. THEREFORE, NO EXPLANATION WAS FURNISHED BY THE ASSE SSEE IN RESPECT OF THE DEFECTS POINTED BY THE AO FOR REJECTION OF BOOK S OF ACCOUNT AND ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 11 PARTICULARLY THE NON MAINTENANCE OF STOCK REGISTER AND DETAILS OF DAY TO DAY VERIFICATION. IT IS PERTINENT TO NOTE THAT THE AFFIDAVIT OF THE ASSESSEE CAN BE ADMITTED ON THE FACTS WHICH ARE KNOWN TO THE ASSESSEE AND NOT THE FACTS WHICH ARE BASED ON THE BOOKS OF ACCOUNTS OR SOME OTHER RECORD. THEREFORE, THE CONTENTION THAT AO HAS NOT P REFERRED TO CROSS EXAMINE TO THE ASSESSEE ON THE CONTENTS OF AFFIDAVI T WOULD AMOUNT TO ACCEPT THE SAME IS NOT ACCEPTABLE. AS THE EXPLANATI ON AND CONTENTS OF THE AFFIDAVITS ARE NOT WITH REGARD TO THE FACT WHIC H ARE ONLY IN THE KNOWLEDGE OF THE ASSESSEE BUT THE ASSESSEE WAS REQU IRED THE EXPLANATION THE FACTS AS RECORDED IN THE BOOKS OF A CCOUNTS. THE ANOTHER MAIN CONTENTION OF LD. AR IS THAT THE LD. CIT(A) HA S NOT FOLLOWED THE DECISION RELIED UPON BY THE ASSESSEE. WE HAVE ALREA DY EXPRESSED OUR VIEW THAT THIS IS PURELY MATTER A QUESTION OF FACTS AND NOT A PURE QUESTION OF LAW WHERE THE DECISION RELIED UPON BY T HE ASSESSEE CAN BE APPLIED BLINDLY. HENCE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW ON THE ISS UE OF REJECTION OF BOOKS OF ACCOUNTS. 6. AS REGARDS THE TRADING ADDITION MADE BY THE AO B Y TAKING THE G.P. @ 15% WE FIND THAT THE ASSESSING OFFICER HAS C ONSIDERED G.P. DECLARED BY THE ASSESSEE IN THE PRECEDING YEAR AT 1 6.49% WHEREAS THE ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 12 ASSESSEE HAS DECLARED G.P. IN THE UNDER CONSIDERATI ON AT 14.29%. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS TO SHOW THAT THE AVERAGE OF G.P. OF THE PRECEDING YEAR IS LESS THAN 15% AS APPLIED B Y THE AO. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE ONCE, THE B OOKS OF ACCOUNTS ARE REJECTED BY THE AO THEN, IN OUR CONSIDERED OPINION THE EXPLANATION OF THE ASSESSEE THAT THE DECLINED G.P. IS DUE TO RISE IN RAW MATERIAL WOULD NOT BE HELP THE CASE OF THE ASSESSEE AS THE AO IS D UTY BOUND TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF SOME REASONABLE AND PROPER CRITERIA. THE DECISION OF THE AO TO ESTI MATE THE INCOME MAY BE SUBJECTIVE BUT SHOULD BE BASED ON OBJECTIVE CRIT ERIA IN THE CASE IN HANDS THE AO HAS ADOPTED THE G.P. AT 15% IN COMPARI SON TO CURRENT YEAR DECLARED G.P. OF THE ASSESSEE AT 14.29% AND PR ECEDING YEAR G.P. AT 16.49%. THEREFORE, EVEN THE AVERAGE OF THESE TWO YEARS IS MORE THAN 15% AND HENCE, THE G.P. ADOPTED AT 15% IS REAS ONABLE AND PROPER. ONCE THE BOOKS OF ACCOUNT WERE REJECTED THE ONLY COURSE OF ACTION AS CONTEMPLATED UNDER THE PROVISIONS OF SECT ION 145(3) R.W.S. 144 OF THE INCOME-TAX ACT IS TO ESTIMATE THE INCOME OF THE ASSESSEE ON SOME REASONABLE AND PROPER BASIS. ACCORDINGLY, IN T HE FACTS AND CIRCUMSTANCES OF THE CASE THE G.P. RATE ADOPTED BY AO AT 15% IS VERY ITA NO. 775/JP/2017 M/S SARAF SEASONING UDHYOG VS. ACIT 13 REASONABLE AND PROPER HENCE, WE DO NOT FIND ANY ERR OR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/02/2019 SD/- SD/- JESK LH0 KEKZ FOT; IKY JKO (RAMESH. C. SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/02/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SARAF SEASONING UDHYOG, CHURU. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE, JHUNJHUNU. 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. 775/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR