ITO, JODHPUR V. Shri Surendra Kumar Hundia, JODHPUR

ITA 87/JODH/2014

• Counselvise Citation: 8723314 RSA 2014
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN
• Keywords: Business income; Depreciation
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 87/JU/2014 ASSESSMENT YEAR: 2009-10 THE I.T.O VS. SHRI SURENDRA KUMAR HUNDIA WARD -1(4) PROP. M/S SWASTIK DAIRY PRODUCTS JODHPUR 8, ROAD NO. 11- II MIA, JODHPUR PAN NO. AALPH 2713 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 05.05.2014 DATE OF PRONOUNCEMENT : 23.05.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE FOR A.Y 2009-2010 AND EMANATES FROM THE ORDER OF THE CIT(A) , JODHPUR, DATED 10.01.2014. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS PROPRIETOR OF M/S SWASTIC FOOD PRODUCTS, JODHPUR AN D DERIVES HIS INCOME FROM SALE OF GHEE, EDIBLE OIL, TEA, DETERGEN T ETC. FOR THE A.Y. 2009-10, HE FILED RETURN OF INCOME [ROI] ON 24 .9.2009 DECLARING TOTAL INCOME AT RS. 2,45,740/-. SURVEY U /S 133A OF THE INCOME-TAX ACT, 1961 ['THE ACT', FOR SHORT] WAS CAR RIED OUT IN HIS CASE ON 25.2.2009. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE DECLARED TURNOVER OF RS. 16,51,4,556/- AND HAS DISCLOSED GROSS PROFIT OF RS. 18,86,127/- GIVING RISE TO GRO SS PROFIT OF 1.14% AS COMPARED TO GROSS PROFIT RATE OF 1.80% SHOWN IN THE IMMEDIATELY PRECEDING A.Y. I.E. 2008-09 ON A TURNOVER OF RS. 18 ,12,05,038/- WHEREIN GROSS PROFIT HAS BEEN DISCLOSED AT RS. 32, 75,184/-. FROM THIS FACT, THE A.O. HAS NOTICED THAT THE GROSS PROF IT RATE DECLARED IN THIS YEAR IS LOWER THAN SOWN IN THE IMMEDIATELY PRE CEDING YEAR. WHEN DEMANDED, THE ASSESSEE EXPLAINED THAT ON ACCOU NT OF HEAVY FLUCTUATION IN THE RATES OF EDIBLE OIL, HE HAS SUFF ERED LOSSES WHICH HAS A BEARING ON THE OVERALL GROSS PROFIT RATE. AS STATED ABOVE, SURVEY WAS CONDUCTED IN THE ASSESSEES PROPRIETARY BUSINESS ALONGWITH IN THE PARTNERSHIP FIRM NAMELY, M/S SWAST IC FOOD PRODUCTS AND IN THE CASE OF SHRI ANAND HUNDIA, WHO IS PROPRIETOR OF 3 M/S ARIHANT GHEE AGENCIES AND BROTHER OF THE ASSESS EE ON 25.2.2009. DURING THE COURSE OF THIS SURVEY, STATE MENT OF THE ASSESSEE AND OTHER PARTNERS WERE ALSO RECORDED AND INVENTORIES OF DOCUMENTS/PAPERS ETC. FOUND WAS PREPARED. LIKEWISE , INVENTORIES OF CASH FOUND AND STOCK FOUND ON PHYSICAL VERIFICAT ION WAS ALSO PREPARED AND VERIFIED FROM THE BOOKS OF ACCOUNT. A T THE BUSINESS PREMISES OF THE ASSESSEE A DIARY WAS FOUND WHICH CO NTAINED SOME TRANSACTIONS OF PAYMENTS. WHEN QUESTIONED, SHRI AN AND HUNDIA AND SHRI SURENDRA HUNDIA ADMITTED THAT THESE TRANSACTIO NS ARE RELATED TO ADVANCES GIVEN FOR PURCHASE OF AGRICULTURAL LAND AND THE SAID TRANSACTIONS DID NOT MATERIALIZE. DURING SURVEY, S HRI ANAND HUNDIA MADE A SURRENDER OF RS. 17 LAKHS AND SHRI SURENDRA HUNDIA SURRENDERED A SUM OF RS. 9 LAKHS ON ACCOUNT OF UNDI SCLOSED INCOME FOR TAXATION. ON PHYSICAL VERIFICATION, CASH AVAIL ABLE AT THE TIME OF SURVEY WAS FOUND EXCESS BY RS. 9,06,120/- WITH SHRI ANAND HUNDIA, THE PROPRIETOR OF M/S ARIHANT GHEE AGENCY, OF RS. 6 ,00,409/- WITH SHRI SURENDRA HUNDIA, THE ASSESSEE AND RS. 4,00,649 /- WITH SHRI SUBASH HUNDIA, PROPRIETOR OF M/S SWASTIC FOOD. THE ASSESSEE, ALONGWITH HIS TWO BROTHERS, SURRENDERED EXCESS CASH FOUND. DURING THE COURSE OF SURVEY, INVENTORY OF PHYSICAL STOCK W AS PREPARED AND 4 AS PER PHYSICAL STOCK FOUND WHICH WAS VALUED BY THE ASSESSEE HIMSELF, THERE WAS STOCK WAS OF RS. 45,70,182/- WHE REAS AS PER STOCK POSITION PREPARED AS ON 25.2.2009 BY THE ASSE SSEE THE STOCK SHOULD HAVE BEEN AT RS. 45,96,116/-. HENCE THERE W AS SHORTAGE OF STOCK OF RS. 25,934/-. THE REASONS FOR THIS SHORTA GE WAS STATED TO BE A MISTAKE OF CALCULATION AS STOCK MAY HAVE SCATT ER DURING THE PROCESS OF SHIFTING. REGARDING EXCESS CASH FOUND A T THE BUSINESS PREMISES OF THE ASSESSEE, IT WAS STATED IN HIS STAT EMENT RECORDED ON OATH DURING THE COURSE OF SURVEY THAT HE DID NOT HA VE ANY ANSWER FOR THIS EXCESS CASH FOUND. THEREFORE, HE DECLARED THE SAME AS HIS UNDISCLOSED INCOME AND OFFERED THE SAME FOR TAXATIO N DURING THE YEAR UNDER CONSIDERATION. 3. REGARDING ENTRY OF RS. 9 LAKHS SHOWN AS ADVANCE PAYMENT FOR PURCHASE OF AGRICULTURAL LAND MADE TO SHRI DHALRAM S/O OF SHRI POLARAM, R/O MOKALSAR ON 13.12.2008 AS PER ANNEXURE A-1, THE ASSESSEE ADMITTED THAT THIS AMOUNT WAS NOT ENTERED IN THE REGULAR BOOKS OF ACCOUNT. THEREFORE, HE SURRENDERED THIS A MOUNT AS HIS UNDISCLOSED INCOME. WHILE EXPLAINING THE SOURCE OF EXCESS CASH FOUND AND UNDISCLOSED AMOUNT OF ADVANCE GIVEN FOR P URCHASE OF 5 LAND, HE EXPLAINED THAT HE DID THE BUSINESS OF PURC HASE AND SALE OUT OF BOOKS AND GENERATED CASH OUTSIDE THE BOOKS. AT THIS STAGE ALSO HE SURRENDERED TOTAL AMOUNT OF RS. 15,00,409/- FOR TAXATION DURING THE YEAR AS HIS UNDISCLOSED INCOME. HE ALSO PAID A DVANCE TAX THEREON. HOWEVER, THE SURRENDERED INCOME WAS NOT H ONOURED IN THE ROI FILED THEREAFTER AND ONLY TOTAL INCOME OF RS. 2,45,740/- HAS BEEN RETURNED BY DISCLOSING TOTAL RECEIPT OF RS . 20,67,329/- AND HAS ADDED RS. 15,00,409/- WHICH WAS SURRENDERED DUR ING THE COURSE OF SURVEY. FROM ALL THESE RECEIPTS, THE ASSESSEE H AS DEDUCTED RS. 32,31,165/- ON ACCOUNT OF VARIOUS EXPENSES AND HAS SHOWN NET PROFIT OF RS. 3,36,574/-. IN CASE SURRENDERED AMOU NT IS CONSIDERED SEPARATELY, THE NET RESULT OF ASSESSEES RETURNED I NCOME COMES TO LOSS OF RS. 11,63,836/-. IN CASE INTEREST RECEIVED FROM THE FIRM IS ALSO CONSIDERED SEPARATELY, THE ASSESSEES LOSS WOR KED OUT TO RS. 12,15,412/-. IT WAS STATED THAT THE GROSS PROFIT E ARNED IN THE PRECEDING YEAR WAS OF RS. 32,75,184/- ON TOTAL TURN OVER OF RS. 18,12,05,038/- WHEREAS GROSS PROFIT DERIVED DURING THE YEAR UNDER CONSIDERATION IS ONLY RS. 18,86,127/- ON TOTAL TURN OVER OF RS. 16,51,47,556/-. ACCORDING TO HIM, THE EXPENSES REM AINING SAME, HE HAS SUFFERED A LOSS ON THE TRADING OF OIL AND DE TERGENT. WHEN 6 SPECIFICALLY ASKED TO EXPLAIN AS TO WHY HIS PURCHAS ES ARE ALWAYS AT A HIGHER RATE AND HIS SALES ARE AT LOWER RATE ON A GI VEN DATE, HE EXPLAINED THAT THE PURCHASE ORDERS ARE PLACED 2 TO 3 MONTHS IN ADVANCE AND RATE FLUCTUATED ALMOST DAILY AND EVEN O N THE SAME DAY RATE FLUCTUATES AND THE ASSESSEE HAS TO SELL THE GO ODS AT A LOWER RATE. BUT THIS CLAIM WAS NOT SUBSTANTIATED WITH PR OOF. IT WAS ADMITTED THAT THE ORDERS WERE PLACED ONLY ORALLY. THE A.O. WAS NOT AGREEABLE WITH THE THEORY OF THE ASSESSEE THAT HE W ILL PLACE ANY ORDERS IN ADVANCE. DURING SURVEY, IN HIS STATEMENT , THE ASSESSEE HAS STATED THAT HE WAS INDULGING IN TRADING OUTSIDE BOOKS OF ACCOUNT. THE A.O. HAS FOUND THAT THE ASSESSEE WAS MANIPULATING SALE BILLS TO SUIT HIS REQUIREMENT AND WAS SUPPRESS ING HIS REAL INCOME. HE HAS FOUND THAT AVERAGE PURCHASES BY ASS ESSEE PER MONTH COMES TO ABOUT RS. 1,25,49,460/- FOR THE FIRS T 11 MONTHS. AFTER SURVEY, ASSESSEES TOTAL PURCHASE FOR THE MON TH OF MARCH ARE TAKEN AT RS. 23,218,318/- AND THE AVERAGE SALE OF T HE ASSESSEE PER MONTH IS AT RS. 1,29,72,289/- WHEREAS THE SALES FOR THE MONTH OF MARCH WAS OF THE ORDER OF RS. 2,24,52,374/-. IN VI EW OF THE ABOVE, THE A.O. HAS REJECTED THE TRADING VERSION OF THE AS SESSEE AND HAS ESTIMATED THE GROSS SALES AT RS. 16,60,000/- AFTER APPLYING GROSS 7 PROFIT RATE OF 1.82% AS DECLARED BY THE ASSESSEE IN THE PRECEDING YEAR. THIS RESULTED INTO GROSS PROFIT OF RS. 30,21 ,200/- AS AGAINST 18,86,127/- GROSS PROFIT DECLARED. FURTHER PERUSA L OF RECORD REVEALS THAT THE ASSESSEE HAD CLAIMED THE EXPENDITU RE OF RS. 12,15,528/- IN THE PROFIT AND LOSS ACCOUNT TOWARDS INTEREST. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE PAID INTE REST TO THE EXTENT OF RS. 13,33,152/- AND AFTER DEDUCTING THE I NTEREST RECEIVED OF RS. 1,17,824/- HAS CLAIMED INTEREST OF RS. 12,15 ,328/-. THE ASSESSEE HAS CLAIMED PAYMENT OF INTEREST TO HIS CRE DITORS @ 12% TO 18% WHEREAS HE HAS RECEIVED INTEREST FROM HIS DEBTO RS @ RANGING BETWEEN 7% TO 12%. THE A.O. PROPOSED TO DISALLOW I NTEREST PAID IN EXCESS OF 12% BUT THE ASSESSEE OBJECTED THIS MOVE B Y SUBMITTING THAT THE INTEREST PAID TO CREDITORS LOOKING TO THE PREVAILING MARKET RATES IS REASONABLE. BUT THE A.O. WAS NOT AGREEABL E. THEREFORE, HE HAS DISALLOWED A SUM OF RS. 1,31,662/- OUT OF INTER EST CLAIMED BY THE ASSESSEE AND HAS ADDED BACK TO HIS TOTAL INCOME . THE A.O. HAS ALSO MADE ADDITION OF RS. 78,000/- BY TREATING THE HOUSE HOLD WITHDRAWALS AS INSUFFICIENT. THIS ADDITION IS BASE D ON ESTIMATION DONE BY THE A.O. FINALLY, THE A.O. HAS COMPUTED TO TAL INCOME OF AT RS. 15,90,477/-. AGGRIEVED, THE ASSESSEE WENT IN A PPEAL AND THE LD. 8 CIT(A) HAS GIVEN PART RELIEF TO THE ASSESSEE BY DEL ETING THE ADDITION OF RS. 11,35,073/- MADE IN THE TRADING ACCOUNT AND ALSO DELETING THE ADDITION OF RS. 1,31,662/- AFTER ADDED AFTER DI SALLOWING INTEREST PAID TO THAT EXTENT. HE HAS ALSO REDUCED THE ADDIT ION FROM RS. 78,000/- TO RS. 25,000/- IN THE ACCOUNT OF LOW HOUS E HOLD WITHDRAWALS. AGAINST THE ABOVE RELIEF GIVEN TO THE ASSESSEE, THE REVENUE HAS PREFERRED THIS APPEAL BY RAISING THE FO LLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (A) HAS ERRED TO ACCEPT ASSESSEE'S CONT ENTION THAT HE HAD BOOKED PURCHASES AT HIGHER RATES AND GO ODS HAD TO BE SOLD AT PREVAILING LOWER RATES IGNORING T HE PURCHASE / SALE TRANSACTIONS FOR 11 MONTHS FROM APR IL 2008 TO FEBRUARY 2009. 2. THE ID. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THERE CANNOT BE PURCHASE RS. 2,32,18,381/- AND SALE RS. 2,24,52,374/- FOR THE MONTH OF MARCH 2009, WHEREAS FOR 11 MONTHS AVERAGE PURCHASE WERE RS. 1,25,49,460/- AND AVERAGE SALE WERE RS. 1,29,72,289/-. 3, THE ID. CIT (A) HAS ERRED IN NOT HOLDING THE L OSS INCURRED IN THE MONTH OF MARCH 2009 AS CONTRIVED LO SS THROUGH BOGUS TURNOVER. 9 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOU ND THAT THE DELETION OF ADDITION OF RS. 11,35,073/- BY THE LD. CIT(A) IS IN ORDER. THE LD. CIT(A) HAS GIVEN HIS FINDING AT PARAS 4.3 T O 4.5 WHICH WE REPRODUCE HEREINBELOW FOR READY REFERENCE: 4.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ORDE R OF THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT A ND I FIND THAT THE APPELLANT'S FIRST OBJECTION IS AGAINST THE TRADING ADDITION OF RS. 11,35,073/- WHICH WAS RESULT OF APP LYING HIGHER G.P. RATE OF 1.82% ON ESTIMATED SALES OF RS. 16,60,00,000/-. THE CONTROVERSY AROSE WHEN THE APPE LLANT DECLARED THE TOTAL RECEIPTS AT RS. 35,67,738/- (CON SISTING OF SURRENDERED INCOME OF RS. 15,00,000/-) AND OUT OF T HIS RECEIPTS, THE APPELLANT CLAIMED DEDUCTION OF RS. 32 ,31,165/- ON ACCOUNT OF VARIOUS EXPENSES, THEREBY SHOWING NET PROFIT OF RS. 3,36,574/- ONLY. THE ASSESSING OFFICER OBSERVED THAT IF THE SURRENDERED IS CONSIDERED SEPARATELY THEN THE ASSES SEE BOOKED A LOSS OF RS. 11,63,836/-. THUS, THE ASSESSI NG OFFICER WAS NOT SATISFIED WITH THE ASSESSEE'S THEORY OF LOS S. DURING THE COURSE OF THE APPELLATE PROCEEDING, THE APPELLA NT'S CONTENDED THAT SURVEY PARTY AS WELL AS THE ASSESSIN G OFFICER DID NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUN TS. IT WAS THE CONTENTION OF THE APPELLANT THAT THE ASSESSEE W AS ALREADY 10 UNDER LOSS AT THE TIME OF SURVEY AMOUNTING TO LOSS OF RS. 9,62,531/- AFTER DEBITING VARIOUS EXPENSES WHICH AR E SUPPOSED TO BE CONSIDERED AFTER THE END OF ACCOUNTI NG YEAR. 4.3.1. I FIND THAT THE ASSESSING OFFICER WHILE MAKI NG THE TRADING ADDITION OF RS. 11,35,073/- HAS NOT PROPERL Y CONSIDERED THE ASSESSEE'S EXPLANATION AS WELL AS VA RIOUS DETAILS / EVIDENCES FILED BY HIM IN SUPPORT OF HIS CLAIM. I FIND THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FORMED A HIGHLY SUBJECTIVE AND ADVERSE VIEW NOTICING THAT AS SESSEE'S PURCHASE ARE AT HIGHER RATE AND HIS SALES ARE AT LO WER RATE ON THE SAME DAY OR ON THE VERY NEXT DAY. I FIND THAT T HIS ALLEGATION OF THE ASSESSING OFFICER IS NOT BASED ON PROPER APPRECIATION OF THE FACTS. THE ASSESSEE BEING A WHO LESALER HAS TO BOOK HIS PURCHASE ORDER IN ADVANCE (UNDER FORWAR D TRANSACTION) ON WHATEVER PREVAILING RATE OF ITEMS E XISTED ON THAT TIME AND AT THE TIME OF ORDER, THE ASSESSEE IS BOUND TO RECEIVE THE GOODS ON THE RATE OF PURCHASE ORDER ALR EADY BOOKED. SUBSEQUENTLY, IF THE SALE PRICE FALLS DOWN, THE ASSESSEE CANNOT BE HELD TO BE RESPONSIBLE FOR THAT AS BEING A DEALER HE HAS TO SELL HIS ITEMS IN NORMAL COURSE OF BUSINESS. BEFORE ME, AS AN EVIDENCE OF PURCHASE AND SALE, THE APPELLANT HAS FILED VAT INVOICES, SHOWING DATE OF BUYERS ORDE R AND DELIVERY DATE BUT THE ASSESSING OFFICER HAS NOT CON SIDERED THE SAME WITHOUT PROVING IT BOGUS AS THE SAME WERE FILE D BEFORE THE ASSESSING OFFICER TOO. THE COPIES OF FEW OF THE M WERE 11 FURNISHED DURING THE APPELLATE PROCEEDING. UPON PER USAL OF THE SAME, I FIND THAT DATE OF ORDER AND DELIVERY DA TE IS CLEARLY MENTIONED THEREIN, IT PROVES THE APPELLANT' S CLAIM THAT ON DELIVERY DATE THE GOODS ARE SUPPLIED AT THE RATE OF ORDER AND NOT AT PREVAILING MARKET RATE ON DELIVERY DATE. THE APPELLANT HAS SUBMITTED THE COPY OF BOOKING DETAILS OF BUNGE INDIA LTD. FROM WHOM THE GOODS ARE PURCHASED UNDER FORWARD TRANSACTIONS WHEREIN THE DATE OF BOOKING AND THE RA TE OF PURCHASE ARE MENTIONED WHICH PROVE THE CLAIM OF THE APPELLANT. APART FROM THE ABOVE, THE APPELLANT HAS ALSO PRODUCED A CHART SHOWING FREQUENT FLUCTUATION IN TH E RATE OF SOYA OIL DURING THE YEAR AS PER NCDEX. THUS, THE AP PELLANT HAS SATISFACTORY BEEN ABLE TO PROVE THAT ON THE DAT E OF DELIVERY THERE IS DIFFERENCE IN PURCHASE AND SALE R ATE. THE EVIDENCES FURNISHED BEFORE ME SUCH AS VAT INVOICES S (CERTIFIED BY THE ASSESSING OFFICER HIMSELF) CLEARL Y PROVE THAT THESE WERE ON RECORD BUT THE ASSESSING OFFICER HAS NEITHER DISCUSSED ABOUT THIS ASPECT OF THE ASSESSEE'S EXPLA NATION NOR CONSIDERED THIS IN HIS ASSESSMENT ORDER. IN VIEW OF THESE, THE ASSESSING OFFICER'S ALLEGATION IS FOUND TO BE INCOR RECT THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT O F HIS CLAIM IN THE SHAPE OF ORDER BOOK. 4.3.2. I FURTHER FIND THAT THE ASSESSING OFFICER'S OBSERVATION THAT THE ASSESSEE HAS MANIPULATED THE SALES BILLS I S ONLY BASED ON PRESUMPTION. NO CONCRETE FINDING OR EVIDENCE HAS BEEN 12 BROUGHT ON RECORD BY THE ASSESSING OFFICER IN SUPPO RT OF HIS OBSERVATION. HE HAS ALSO FAILED TO POINT OUT ANY SP ECIFIC INSTANCE OF SALE BILL WHICH WAS FOUND TO BE MANIPUL ATED. RATHER, ON PERUSAL OF THE RECORD. I FIND THAT THE A SSESSING OFFICER HAS VERIFIED THE PURCHASE AND SALES BILLS F ROM CONCERN TRADERS AND COULD NOT FIND FAULT IN THEM. EVEN THES E PURCHASE AND SALES BILLS ARE FROM TRADER TO TRADER AND NOT T O CONSUMER. SO NO CREDENCE CAN BE GIVEN TO ANY OBSERVATION BASE D ON SUSPICION AND PRESUMPTION. 4.3.3. I FURTHER FIND THAT THE ASSESSING OFFICER H AS WRONGLY CONCLUDED THAT THE ASSESSEE HAD BOOKED A LOSS IN MA RCH BY WAY OF INCREASING PURCHASE AND SALES. FROM THE COPY OF P&L ACCOUNT (DRAWN BY SURVEY PARTY AND CERTIFIED BY THE ASSESSING OFFICER), I FIND THAT AS ON 25-2-2009 I.E. DATE OF THE SURVEY, THE ASSESSEE WAS ALREADY SUFFERING FROM THE NET LOS S OF RS. 1,22,380/-. IT WAS CLAIMED THAT THIS LOSS WAS PRIOR TO THE DATE OF SURVEY. I FURTHER FIND THAT AFTER TAKING INTO AC COUNT CERTAIN EXPENSES LIKE INTEREST, DEPRECIATION, BROKERAGE, WA GES TO STAFF, LIGHT AND WATER EXPENSES ETC. WHICH ARE USUA LLY DETERMINED AND DEBITED AT THE CLOSE OF THE ACCOUNTI NG PERIOD, I FIND THAT THE NET LOSS AS ON 25-2-2009 IT SELF WAS RS. 1,22,380/- AND AFTER DEBITING THE VARIOUS EXPENSES LIKE DEPRECIATION AND INTEREST OF 11 MONTHS I.E. UP TO 2 5-2-2009, NET LOSS COMES TO RS. 9,62,531/-. 13 4.4. FURTHER THE ASSESSING OFFICER'S OBJECTION THAT THE ASSESSEE HAS MADE MORE PURCHASE AND SALES IN THE MA RCH TO BOOK A LOSS, IS CONTRARY TO THE DETAILS OF PURCHASE AND SALES SUBMITTED BEFORE ME. THE APPELLANT HAS FURNISHED TH E DETAILS OF PURCHASE AND SALES AS UNDER:- MONTH APRIL 08 MAY 08 JUNE 08 SALES DETAIL 8554595.61 15870094.66 12308454.64 PURCHASES DETAIL 6953701.06 14614075.30 13662808.74 1ST QUARTER 36733144.91 35230585.10 JULY 08 AUGUST 08 SEPT. 08 14449005.29 12610502.68 14195281.37 14382498.42 10851006.88 14993661.70 2ND QUARTER 41254789.34 40227167.00 OCT. 08 NOV. 08 DEC. 08 18961360.21 13183707.70 14039140.69 16491679.47 13073599.49 14074322.78 3RD QUARTER 46184208.60 43639601.74 JAN. 09 FEB. 09 MARCH 09 14181924.38 8707737.30 22398323.67 10940238.08 7782286.44 23218380.91 4TH QUARTER 45087985.35 41940905.43 TOTAL 169460128.20 161038259.27 4.4.1. AS CAN BEEN SEEN FROM THE ABOVE CHART, I FIN D THAT IN THE 3 QUARTER I.E. 31-10-2008 TO 31-12-2008, THE TO TAL SALES WAS RS. 4,61,84,208/- AND PURCHASE WAS RS. 4,36,39, 601/- AND IN THE 4TH QUARTER I.E. FROM 1-1-2009 TO 31-3-2009, THE TOTAL SALES WAS RS. 4,52,87,985/- AND TOTAL PURCHASE WAS RS. 4,19,40,905/-. I FIND THAT THERE IS NOT MUCH DIFFER ENCE BETWEEN THE PURCHASE AND SALES QUARTER AND AS WELL AS MONTH WISE IN COMPARISON TO MARCH. THOUGH THE PURCHASE AN D SALE OF 14 MARCH ARE HIGH BUT NOT MANY FOLDS AS ALLEGED BY THE ASSESSING OFFICER. IN THE MONTH OF OCT, 2008, THE TOTAL SALES WAS RS. 1,89,61,360/- AND IN MARCH 09, IT WAS RS. 2,23,98,3 23/-. THUS, IT CANNOT BE SAID THAT ONLY IN THE MONTH OF M ARCH, THE APPELLANT HAS INCREASED THE PURCHASE AND SALES MANY FOLD TO REDUCE THE PROFIT. IT WAS EXPLAINED BY THE APPELLAN T THAT AT THE CLOSE OF ACCOUNTING PERIOD, EVERY BUSINESSMAN T RIES TO CLEAR MAXIMUM STOCK, SO CERTAINLY THE SALES WOULD B E MORE IN THE MONTH OF MARCH. 4.5. I FURTHER FIND THAT THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER HAS NOT POINTED OUT SPECIFIC DEFEC TS IN THE MAINTENANCE OF THE BOOKS OF ACCOUNTS. EVEN HE HAS N OT REJECTED THE BOOKS OF ACCOUNT U/S 145(3) EXPRESSLY OR IMPLIEDLY. NO TRADING ADDITION CAN BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNTS. FURTHER, I FIND THAT THE SAL E ESTIMATED BY THE ASSESSING OFFICER AT RS. 1,60,00,000/- AS AG AINST RS. 16,51,47,556/- IS ALSO WITHOUT ANY BASIS. THE APPLI CATION OF HIGHER G.P. RATE AT 1.82% IS WITHOUT ANY BASIS AND IGNORING THE FACTS/EXPLANATION FURNISHED BY THE ASSESSEE BEF ORE HIM. IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE TRADING ADDITION OF RS. 11,35,073/- BY APPLYING HIGHER G.P. RATE OF 1.82%. THE ADDITION OF RS. 11,35,073/~ IS DELETED. THE ASSESSING OFFICER IS DI RECTED TO ACCEPT THE TRADING RESULTS SHOWN -BY THE APPELLANT. THE GROUNDS RAISED IN THIS REGARD ARE ALLOWED. 15 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 23 RD MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD MAY, 2014 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR