Shital Adinath Ketkale, Kolhapur V. Deputy Commisisoner of Income-tax ,

ITA 775/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0485 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Wrong claim; Corroborative evidences; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 234B; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.775/PN/2015 / ASSESSMENT YEAR : 2010-11 SMT. SHITAL ADINATH KETKALE, PLOT NO.111, SECTOR-A, LAXMI INDUSTRIAL ESTATE, A/P. HATKANANGALE, KOLHAPUR. PAN : ABUPK3324N . / APPELLANT V/S DCIT, ICHALKARANJI, ICHALKARANJI . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI P.L. KUREEL / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 03-03-2015 OF THE CIT(A)-I & II, KOLHAPUR RELATING TO ASS ESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND IS ENGAGED IN THE JOB WORK AND MANUFACTURING OF AUTOPART S UNDER THE NAME OF SANMATI CNC ENGINEERING WORKS. SHE FILED HER RET URN OF INCOME ON 28-09-2010 DECLARING TOTAL INCOME OF RS.10,25,050 /-. THE RETURN WAS ACCOMPANIED WITH TAX AUDIT REPORT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AND COMPUTATION OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS.95,96,791/- ON A TURNOVER OF / DATE OF HEARING :08.11.2016 / DATE OF PRONOUNCEMENT:11.11.2016 2 ITA NO.775/PN/2015 RS.5,57,17,210/- WHICH WORKS OUT TO 17.22%. HE OBSERVED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR ON A TURNOVER OF RS.4,33 ,23,476/- THE ASSESSEE HAD SHOWN GROSS PROFIT OF RS.84,00,219/- WHICH WORKS OUT TO 19.39%. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSE E HE OBSERVED THAT THE GROSS PROFIT FOR THE A.Y. 2008-09 WAS SHOWN AT 26.34%. ON BE ING QUESTIONED BY THE ASSESSING OFFICER TO JUSTIFY THE REASONS FOR FALL IN T HE GP IT WAS SUBMITTED THAT DUE TO CONTINUOUS INCREASE IN RECA STING, CONSUMABLES, TOOLS, LUBRICATION, TRANSPORTATION, WAGES AND PO WER CONSUMPTION THE GROSS PROFIT RATE HAS BEEN REDUCED. HO WEVER, IN ABSENCE OF ANY SUPPORTING EVIDENCE THE ASSESSING OFFICER DISBELIEVED THE SUBMISSION MADE BY THE ASSESSEE AND PROCEEDED TO INVE STIGATE THE MATTER. 3. FROM THE PROFIT AND LOSS ACCOUNT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED MACHINING CHARGES OF RS.1,84,26,327 /- WHICH ACCORDING TO HIM WAS VERY HIGH AS COMPARED TO EARLIER YE ARS. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE HE FURTHER NOTE D THAT AN AMOUNT OF RS.1.29 CRORES OUT OF RS.1.84 CRORES HAS BEEN GIVEN TO THE FOLLOWING 4 SISTER CONCERNS : ADINATH CNC ENGINEERING WORKS 44,60,166 CHAMPION CNC ENGINEERING WORKS 47,76,121 VARDHMAN CNC ENGINEERING 14,62,141 SONASHRI CNC ENGINEERING 22,01,324 TOTAL 1,28,99,752 4. SINCE THE MACHINING CHARGES CLAIMED IN THE YEAR SHOWED ABNORMAL INCREASE OVER LAST YEAR, THE ASSESSING OFFICER MADE EFFORTS TO FIND OUT THE REASONS FOR SUCH INCREASE. AFTER DETAILED VERIFICATION AND IN VESTIGATION HE NOTED THAT THE ASSESSEE HAS OBTAINED BOGUS BILLS FROM ITS SISTER CONCERNS PARTICULARLY IN THE MONTH OF MARCH 2010 AND TRIED TO SUP PRESS HER PROFIT BY CLAIMING BOGUS MACHINING CHARGES TO THE TUNE OF RS.13,93,271/- IN THE NAME OF ADINATH CNC ENGINEERING WORKS AND RS.80,125/- IN THE NAME OF 3 ITA NO.775/PN/2015 SANASHRI CNC ENGINEERING BOTH TOTALING TO RS.14,73,396/-. T HE ABOVE WAS BASED ON THE BASIS OF BOGUS CHALLAN-CUM-INVOICE OF TH E ABOVE TWO CONCERNS SINCE THERE ARE CERTAIN ERRORS FOUND IN THE DA TE AND TIME OF REMOVAL OF GOODS NOTED ON THE CHALLAN-CUM-INVOICE. ON BE ING CONFRONTED BY THE AO, IT WAS SUBMITTED THAT ALL THE BILLS ARE GENUINE, T HE PAYMENT IS MADE BY CHEQUE AND THE LEDGER ACCOUNTS WERE FILED TO SU PPORT THE SAME. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND NOTING THAT THE MACHINING CHARGES CLAIMED FOR THE YEAR ARE ON THE HIG HER SIDE, THE ASSESSING OFFICER MADE ADDITION OF RS.14,73,396/- ON ACCOUN T OF BOGUS CLAIM OF MACHINING CHARGES BY REJECTING THE BOOKS OF ACCOU NT OF THE ASSESSEE IN TERMS OF SECTION 145(3) OF THE ACT. 5. SIMILARLY, THE ASSESSING OFFICER NOTED THAT THE MACHINING CHARGES ARE PAID TO OTHERS DURING THE MONTH OF AUGUST, DECEMBE R AND MARCH ARE FOUND TO BE MORE THAN THE LABOUR CHARGES RECEIVED BY T HE ASSESSEE DURING THESE RESPECTIVE MONTHS WHICH NOT ONLY LOOKS ABSURD BU T UNUSUAL ALSO. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.2,84,707/- AS EXCESSIVE AND UNREASONABLE. 6. THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE Y EAR THE ASSESSEE HAS SHOWN SALE OF SCRAP TO THE TUNE OF RS.79 ,27,682/-. HOWEVER, NO STOCK OF SCRAP HAS BEEN SHOWN IN THE BOOKS OF ACCOUNT. ON COMPARISON OF SALE OF SCRAP WITH EARLIER YEARS HE NOTED TH AT THIS SCRAP SHOWN FOR THE IMPUGNED ASSESSMENT YEAR IS ON THE LOWER SIDE, THE DETAILS OF WHICH ARE AS UNDER : A.Y. SCRAP SALE (RS.) TOTAL TURNOVER (RS.) % OF SCRAP SALE WRT TURNOVER 2010 - 11 79,27,682 5,57,17,210 14.22% 2009 - 10 67,35,354 4,33,23,476 15.54% 2008 - 09 63,63,368 3,37,55,373 18.85% 16.20% 4 ITA NO.775/PN/2015 HE, THEREFORE, ASKED THE ASSESSEE TO JUSTIFY THE SAME. IT WAS EXPLAINED BY THE ASSESSEE THAT THE GENERATION OF SCRAP DEPENDS ON THE TYPE OF JOB WORK UNDERTAKEN, REDUCTION ETC. AND SALE DEPENDS UPON THE VO LUME OF SCRAP GENERATED, MARKET RATE ETC. IT WAS ARGUED THAT THE A SSESSEE HAS SOLD ALL THE SCRAP THROUGH SEPARATE INVOICE AND THEREFORE THE FIG URES SO DECLARED SHOULD BE ACCEPTED. 7. HOWEVER, THE ASSESSING OFFICER WAS NOT FULLY SATISFIED WIT H THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT ALT HOUGH THERE IS SOME FORCE IN THE ASSESSEES SUBMISSION AND ARGUMENT, HO WEVER, IT CANNOT BE ACCEPTED IN ITS ENTIRETY BECAUSE THE ASSESSE E HAS FAILED TO PROVIDE THE BASIC INFORMATION IN THE FORM OF TOTAL QUANTIT Y OF MATERIAL AVAILABLE THROUGH PURCHASE/JOB WORK FOR MACHINING, TOTAL QU ANTITY DESPATCHED/SOLD AFTER MACHINING AND TOTAL QUANTITY OF SCRA P GENERATED, TOTAL QUANTITY SOLD AND REMAINED IN STOCK IN TERMS OF KILOG RAMS. HE FURTHER NOTED THAT ALTHOUGH THE ASSESSEE HAS SHOWN PE RCENTAGE OF SCRAP SALE AS HIGH AS 20.90% IN THE MONTH OF APRIL 2009 AND MOR E THAN 18% SHOWN FOR THE MONTH OF JULY 2009 AND JANUARY 2010, HOWEV ER, THE YEARLY AVERAGE IS ONLY 14.22%. CONSIDERING THE AVERAGE SALE OF SCRAP @17% FOR THE EARLIER 2 YEARS, GIVING DUE WEIGHTAGE TO ASSESSEES S UBMISSION AND CONSIDERING THE NATURE OF JOB WORK CARRIED OUT BY ASSES SEE, JOB WORK GOT DONE FROM SISTER CONCERNS/OUTSIDERS AND TO MEET ENDS O F JUSTICE, THE ASSESSING OFFICER MADE ADDITION OF RS.9,87,101/- AS REASONABL E UNDISCLOSED INCOME BY ADOPTING RATIO OF 16% THE DETAILS O F WHICH ARE AS UNDER : TOTAL TURNOVER SHOWN 5,57,17,210 16% OF THE TURNOVER 89,14,753 LESS: SHOWN BY ASSESSEE 79,27,682 ADDITION ON A/C OF SCRAP 9,87,071 5 ITA NO.775/PN/2015 THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.9,87,07 1/- AS UNDISCLOSED INCOME ON ACCOUNT OF SCRAP. 8. THE ASSESSING OFFICER SIMILARLY NOTED THAT THE ASSESSEE HAS CLAIMED LOADING AND UNLOADING EXPENSES OF RS.5,81,775/- AS AGAINST RS.1,25,676/- IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE PERCENTAGE OF THIS EXPENDITURE WITH RESPECT TO TURNOVER WORKED OUT TO 1% AND 0.029% RESPECTIVELY. THUS, ACCORDING TO THE ASSESSIN G OFFICER THE ASSESSEE HAS CLAIMED MORE THAN 70% EXPENSES THAN LAST YEAR IN COMPARISON WITH THE TURNOVER. HE FURTHER NOTED THAT TH ESE EXPENSES ARE NOT PROPERLY VOUCHED, SUPPORTED BY SELF-MADE VOUCHER S AND THE IDENTIFICATION OF THE PERSON RECEIVING THE PAYMENT IS NOT VE RIFIABLE. NO JUSTIFIABLE REASONS HAVE BEEN PUTFORTH BY THE ASSESSEE D URING THE COURSE OF HEARING. ON BEING ASKED BY THE ASSESSING OFFICER, IT WAS EXPLAINED THAT DUE TO INCREASE IN THE TURNOVER AND RATE OF LABOURERS T HE EXPENSES ON ACCOUNT OF LOADING AND UNLOADING HAS INCREASED. 9. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE. CONSIDERING THE NATUR E OF BUSINESS, VOLUME OF TURNOVER, WORK GOT DONE THROUGH SISTER CONCE RNS/OUTSIDERS, INCREASE IN RATE OF LABOUR AND DEFECT IN SUPPORTING EVIDENC ES THE ASSESSING OFFICER DISALLOWED ON ADHOC BASIS 50% OF SUCH EXPE NSES AND MADE ADDITION OF RS.2,80,887/-. SIMILARLY, OUT OF THE VARIOUS OTHER EXPENSES THE ASSESSING OFFICER DISALLOWED 20% OF SUCH EXPEN SES ON THE GROUND THAT THESE ARE SUPPORTED BY SELF MADE VOUCHERS AND THE IDENTITY OF THE PERSONS RECEIVING THE PAYMENT IS NOT VERIFIABLE. IN R ESPECT OF TELEPHONE, TRAVELLING, VEHICLE MAINTENANCE SOME ELEMENT OF PE RSONAL EXPENSES IS ALSO EMBEDDED IN THESE EXPENSES. THUS, THE ASSESSING OFFICER MADE ADDITION OF RS.3,54,651/- OUT OF THE VARIOUS EXPE NSES, THE DETAILS OF WHICH ARE AS UNDER : 6 ITA NO.775/PN/2015 NATURE OF EXPENSES AMOUNT CLAIMED AMOUNT DISALLOWED LABOUR WELFARE 3,96,837 79,367 OFFICE EXPENSES 79,918 15,983 TELEPHONE EXPENSES 2,03,227 40,645 TRAVELLING EXPENSES 3,96,417 79,283 VEHICLE MAINTENANCE 1,19,318 23,863 REPAIRS & MAINTENANCE 5 ,77,554 1,15,510 TOTAL 3,54,651 THE ASSESSING OFFICER THUS MADE ADDITION OF RS.33,90,712/- ON VARIOUS HEADS AS DISCUSSED ABOVE AND DETERMINED THE TOTAL INCO ME AT RS.44,15,760/- AGAINST RS.10,25,047/- DECLARED BY THE ASSESSEE. 10. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSES SING OFFICER AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL WITH THE FOLLOWING GROUNDS : (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 14 ,73,396/- OUT OF MACHINING CHARGES WHICH IS NECESSARY ITEM OF EXPENDITU RE TO EARN THE PROFITS OF IN THIS LINE OF BUSINESS MADE BY THE A.O. ON THE BA SIS OF ASSUMPTIONS, PRESUMPTIONS THAT TOO REJECTING THE WELL MAINTAINED B OOKS OF ACCOUNT INVOKING PROVISIONS OF S. 145(3) OF THE ACT. THE ADDI TION BE QUASHED AND SET ASIDE. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE A. O. OF RS. 2,84,707/- OUT OF MACHINING CHARGES PAID TO PARTIES OTHER THAN S ISTER CONCERNS ON FRIVOLOUS PRESUMPTIONS AND ASSUMPTIONS AND FORGETTING TH E CARDINAL PRINCIPLE OF LAW THAT ONCE THE BOOKS OF ACCOUNT ARE REJECTED U /S 145(3) NO OTHER ADDITION CAN BE MADE EXCEPT ESTIMATION OF GROSS PROFIT PERCENTAGE. THE A. O. HAS REJECTED THE BOOKS OF ACCOUNT AS WELL AS MADE SUCH A DDITIONS. THE ADDITION BE QUASHED AND SET ASIDE. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 9, 87,071/- ON ACCOUNT OF SALE OF SCRAP MADE BY THE A.O. EVENTHOUGH WELL MAINTA INED AND AUDITED BOOKS OF ACCOUNT HAVE BEEN BEFORE BOTH THE AUTHORITIES THA T TOO AFTER REJECTING THE BOOKS OF ACCOUNT U/S 145(3). THE DISALLOWANCE IS ILLEG AL AND WITHOUT JURISDICTION. IT BE QUASHED ON SET ASIDE. (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE ADDITION OF RS. 2,90,887/- MADE BY THE A.O. OUT OF LOADING AND U NLOADING CHARGES AND CONFIRMED BY LD. CIT(A) IS ILLEGAL AND WITHOUT JURISD ICTION. IT BE QUASHED AND SET ASIDE. 7 ITA NO.775/PN/2015 (5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 3, 54,651/- EQUAL TO 20% OF RS. 17,73,271/- OF EXPENSES ON AD-HOC BASIS. SUCH DISALLO WANCE IS ILLEGAL AND WITHOUT JURISDICTION. IT BE QUASHED AND SET ASIDE. (6) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE MOOT QUESTION IS WHETHER WHEN THE ACCOUNTS ARE REJECTED U/S 145(3) AN D STILL THEN A.O. HAS MADE VARIOUS ADDITIONS AMOUNTING TO RS. 33,90,712/- T O THE RETURNED INCOME OF RS. 10,25,047/- IS NOTHING BUT ENHANCEMENT OF INCO ME MADE BY THE A.O. AND CONFIRMED BY CIT(A) WITHOUT FOLLOWING DUE PROCESS OF LAW? WHETHER IT WOULD BE CALLED 'REAL INCOME' WHICH REAL INCOME IS REQUIRE D TO BE TAXED UNDER THE PROVISIONS OF INCOME-TAX ACT? (7) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEVY OF INTEREST U/S 234A, 234B AND 234C IS NOT JUSTIFIED. (8) THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 11. THE LD. COUNSEL FOR THE ASSESSEE RELYING ON VARIOU S DECISIONS SUBMITTED THAT WHEN THE ASSESSING OFFICER HAS REJECTED THE BOOK RESULTS HE COULD HAVE ESTIMATED THE PROFIT AND COULD NOT HAVE MADE SEPARATE ADDITION ON ACCOUNT OF VARIOUS HEADS. HE SUBMITTED THAT IF THE ADDITION MADE BY THE ASSESSING OFFICER WHICH HAS BEEN UPHELD BY TH E CIT(A) IS ACCEPTED THEN GP COMES TO 23.31% WHICH IS VERY MUCH ON THE HIGHER SIDE. HE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED BOO KS OF ACCOUNT WHICH ARE DULY AUDITED AND THE AUDITORS HAVE NOT POINT ED OUT ANY MISTAKE. THEREFORE, NO ADDITION SHOULD HAVE BEEN MADE ON ACCOUNT OF MACHINING CHARGES, SALE OF SCRAP, LOADING AND UNLOADING EXPEN SES AND THE DISALLOWANCES OF VARIOUS EXPENSES. 12. IN HIS ALTERNATE ARGUMENT HE SUBMITTED THAT SINCE T HE BOOK RESULTS HAVE BEEN REJECTED BY THE ASSESSING OFFICER A REASONAB LE ESTIMATE SHOULD BE MADE TO THE GP WHICH ACCORDING TO HIM SHOULD BE 18%. 13. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS THOROUGHLY INVESTIGATED THE MAT TER AND HAS MADE REASONABLE DISALLOWANCE WHICH HAS BEEN UPHELD BY THE CIT(A ). THE LD. 8 ITA NO.775/PN/2015 COUNSEL FOR THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL T O SUGGEST AS TO HOW THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND UPH ELD BY THE CIT(A) IS ERRONEOUS. HE ACCORDINGLY SUBMITTED THAT THE OR DER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSE D. 14. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CASE IS ENG AGED IN JOB WORK AND MANUFACTURING OF AUTOPARTS IN THE NAME AND STYLE OF S ANMATI CNC ENGINEERING WORKS. THE ASSESSEE HAS SHOWN GP OF RS.95,96,7 91/- ON A TURNOVER OF RS.5,57,17,210/- WHICH WORKS OUT TO 17.22%. SIN CE THE GP SHOWN BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEA R IS LESS THAN THE GP OF 19.39% FOR A.Y. 2009-10 AND 26.34% FOR A.Y. 2008-09 T HE ASSESSING OFFICER CONDUCTED DEEP ENQUIRY AND FOUND THAT ASSESSEE HAS MADE BOGUS CLAIM OF MACHINING CHARGES TO REDUCE ITS GROS S PROFIT. HE THEREFORE MADE ADDITION OF MACHINING CHARGES AT RS.14,73,396 /- PAID TO SISTER CONCERNS AND RS.2,84,707/- PAID TO OTHERS ON THIS ACCOUNT. SIMILARLY, HE ALSO MADE ADDITION ON ACCOUNT OF SCRAP SALES S INCE ACCORDING TO HIM THE SALE OF SCRAP DURING THE YEAR AS A PERCENTAGE OF TOTAL TURNOVER IS MUCH LESS THAN THE SALE OF SCRAP IN THE PRECEDING 2 ASSESSMENT YEARS. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.2,90,887/- OUT OF LOADING AND UNLOADING EXPENSES AT 50% OF SUCH EXPENSES CLAIMED BEING UNVERIFIABLE IN NATURE. THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS.3,54,651/- OUT OF VARIOUS EXPENS ES CLAIMED IN THE PROFIT AND LOSS ACCOUNT BEING NOT SUPPORTED BY P ROPER VOUCHERS AND ON ACCOUNT OF PERSONAL EXPENSES BEING NOT RULED OUT. 9 ITA NO.775/PN/2015 15. I FIND THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE FALL IN THE GP AND COULD NOT POINT OUT AS TO HOW THE ORDER PASSED BY THE ASSESSING OFFICER IS UNREASONABLE. IT IS THE SUBMISSION OF THE LD. COU NSEL FOR THE ASSESSEE THAT WHEN THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3) HE SH OULD HAVE GONE FOR GP ADDITION AND SHOULD NOT HAVE GONE FOR DISALLOWANCE O F VARIOUS EXPENSES. IT IS ALSO HIS SUBMISSION THAT IF THE ADDITION MAD E BY THE ASSESSING OFFICER WHICH HAS BEEN SUSTAINED BY THE CIT(A) IS ACCEPTED THEN THE GP RATE COMES TO 23.34% WHICH IS NOT POSSIBLE IN THIS LINE OF BUSINESS. 16. IT IS ALSO HIS SUBMISSION THAT SINCE THE BOOKS OF ACC OUNT ARE AUDITED AND THE AUDITORS HAVE NOT POINTED OUT ANY MISTA KE AND THE ADDITION MADE BY THE ASSESSING OFFICER IS BASED ON PURELY SURMISES AND PRESUMPTIONS, THEREFORE, SUCH ADDITION SHOULD BE DELETED. I DO NOT FIND MUCH FORCE IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE IN THE ABOVE ARGUMENTS SINCE THE ASSESSING OFFICER HAS CO NDUCTED INDEPTH ENQUIRY TO FIND OUT THE FALL IN THE GP RATE AS COMP ARED TO THE PRECEDING ASSESSMENT YEAR. HOWEVER, I FIND SOME FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE HUGE ADD ITION AS MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) IS CONSIDERE D, THEN THE GP RATE COMES TO 23.34% WHICH IS MUCH MORE THAN THE GP SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, I.E. A.Y. 2009-10 AT 19.39%. I FIND THE GP RATE OF THE ASSESSEE IN THE PRECEDING 2 ASSE SSMENT YEARS AS WELL AS THE CURRENT ASSESSMENT YEAR ARE AS UNDER : 2008 - 09 26.34% 2009 - 10 17.39% 2010 - 11 17.22% TOTAL 62.95% AVERAGE 20.98% 10 ITA NO.775/PN/2015 17. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, I AM OF THE CONSIDERED OPINION THAT ADOPTION OF 21% OF GP UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WILL MEET T HE ENDS OF JUSTICE. I HOLD AND DIRECT ACCORDINGLY. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE GP AND MAKE SUITABLE ADDITIO N. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWE D. 18. SO FAR AS GROUND RELATING TO LEVY OF INTEREST U/S.234A , 234B AND 234C IS CONCERNED THE SAME IS MANDATORY AND CONSEQUENTIAL IN NATU RE. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-11-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 11 TH NOVEMBER, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , $ % / TRUE COPY // // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 1 & 2, KOLHAPUR 4. THE CIT, 1 & 2, KOLHAPUR 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.