The ITO, Ward-3, Mehsana V. Shri Prakashkumar Kanaiyalal Shah, Kalol

ITA 981/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8872 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-02-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: S N DIVETIA
• Keywords: Gross profit estimation; Rejection of books of accounts; Gift; Business income; Income from undisclosed sources

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, C-BENCH, AHMEDABAD. BEFORE: SHRI T K SHARMA, JUDICIAL MEMBER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO.981/AHD/2007 WITH CO NO.89/AHD/2007 (ASSESSMENT YEAR 2003-2004) ITO, WARD-3, MEHSANA. VERSUS PRAKASHKUMAR KANAIYALAL SHAH PROP. OF ASHOK READYMADE STORE, KALOL. (APPELLANT) (RESPONDENT) PAN:ADIPS 2070 D ITA NO.1100/AHD/2007 (ASSESSMENT YEAR 2003-2004) PRAKASHKUMAR KANAIYALAL SHAH PROP. OF ASHOK READYMADE STORE, KALOL. VERSUS ITO, WARD-3, MEHSANA. (APPELLANT) (RESPONDENT) PAN:ADIPS 2070 D ITA NO.1101/AHD/2007 (ASSESSMENT YEAR 2004-2005) PRAKASHKUMAR KANAIYALAL SHAH PROP. OF ASHOK READYMADE STORE, KALOL. VERSUS ITO, WARD-3, MEHSANA. (APPELLANT) (RESPONDENT) PAN:ADIPS 2070 D FOR THE REVENUE: SHRI M.C. PANDIT, SR. DR FOR THE ASSESSEE: SHRI S.N. DIVETIA, AR ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER): TWO CROSS OBJECTIONS FOR THE ASSESSMENT YEAR 2003-2004, ONE BY THE ASSESSEE AND OTHER BY THE DEPARTMENT AND ONE CO ARE FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF 2 ITA NO.981/AHD/2007 AND ORS. LD. COMMISSIONER OF INCOME TAX(APPEALS), ON THE ISS UE ON WHICH REVENUE HAS FILED THE APPEAL FOR THE ASSESSMENT YEA R 2003-2004. THERE IS ANOTHER APPEAL FILED BY THE ASSESSEE FOR THE ASS ESSMENT YEAR 2004- 2005. ALL THESE APPEALS AND CROSS OBJECTIONS CONTA INED COMMON ISSUES AND THEREFORE THEY ARE TAKEN UP TOGETHER FOR THE SA KE OF CONVENIENCE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND IS CARRYING ON PROPRIETARY BUSINESS IN READYMADE GARME NTS. HE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-2004 ON 13-0 9-2003 ON AN INCOME OF RS.1,81,000/-. A SURVEY UNDER SECTION 13 3A WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 29-09-2003 (PERTAIN ING TO ASSESSMENT YEAR 2004-2005) DURING THE COURSE OF WHICH ASSESSIN G OFFICER FOUND STOCK NOT FULLY RECORDED IN THE BOOKS OF ACCOUNTS F OR WHICH ASSESSEE MADE DISCLOSURE OF RS.9,81,286/-. 3. ITA NO.1100/AHD/2007 ASSESSEES APPEAL FOR THE A SSESSMENT YEAR 2003-2004. IN THIS APPEAL THE ASSESSEE HAS OBJECTED TO CONFIRM ING ADDITION OF RS.1,24,770/- ON ACCOUNT OF LOW GP AND OF RS. 10,00 0/- FOR LOW HOUSE HOLD WITHDRAWALS. THE ASSESSEE HAS RAISED FOLLOWIN G GROUNDS: 1. THE ORDER PASSED BY THE LD.CIT(A)-XXI, AHMEDABAD ON 22-12-2006 FOR A.Y. 2003-04 CONFIRMING THE ADDITION OF RS.1,24,770/- ON ACCOUNT OF LOW GROSS PROFIT IS WHO LLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUST ICE. THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT THE LD. A.O . HAS NOT FOUND ANY DEFECT IN THE BOOKS OF ACCOUNTS OR BILLS OR PURCHASE AND SALE REGISTERS. 2. THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS OF THE CASE CONFIRMING GP ADDITIONS IN PART THOUGH THE REPLIES OF APPELLANT ARE CRYSTAL CLEAR. 3 ITA NO.981/AHD/2007 AND ORS. 3. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING GP ADDITIONS WITHOUT APPRECIATING VARIOUS JUDICIAL PRONOUNCEMENT S WHICH ARE IN FAVOUR OF YOUR APPELLANT. 4. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS OUGHT TO HAVE ALLOWED THE APPEAL IN FULL ON THE GROSS PROFIT ISSUE. 5. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CON FIRMING ADDITION ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOL D EXPENSES THROUGH THE APPELLANT IS STAYING IN OWN HO USE, OTHER PERSONAL EXPENSES ARE DEBITED SEPARATELY AND THE SIZE OF FAMILY IS ONLY THREE PERSONS (I.E. SELF, WIFE AN D A SCHOOL GOING BOY). 6. IT IS THEREFORE PRAYED THAT BOTH THE ADDITIONS O F RS.1,24,770/- AND RS.10,000/- MAY KINDLY BE DELETED. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS NOT FURNISHED THE D ETAILS OF OPENING AND CLOSING STOCK IN TERMS OF QUANTITY AND PRICE AND SO ALSO THE DETAILS OF PURCHASES AND SALES. HE DID NOT MAINTAIN ANY STOCK REGISTER OR SALE REGISTER. EVEN SALE BILLS WERE NOT PRODUCED TO SHO W THAT ASSESSEE HAS BEEN GIVING DISCOUNT TO THE CUSTOMERS. THUS, IN AB SENCE OF BASIC RECORDS NOT COMING FORTH FROM THE ASSESSEE, BOOKS OF ACCOUN TS WERE REJECTED AND PROFITS WERE ESTIMATED. THE ASSESSING OFFICER RELI ED UPON THE PAST HISTORY AS WELL AS DISCLOSURE OF UNACCOUNTED STOCK MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY. ON A TOTAL SALES OF R S.30,76,988/- A GP OF RS.6,44,477/- GIVING G.P. RATE OUT AT 20.94%. THE ASSESSING OFFICER CONSIDERED THAT DURING THE COURSE OF SURVEY GP MARG IN WAS FOUND AT 37.5%. HE FINALLY APPLIED A GP RATE OF 30% AND MAD E ADDITION OF RS.2,78,775/-. THE LD. COMMISSIONER OF INCOME TAX( APPEALS) 4 ITA NO.981/AHD/2007 AND ORS. CONFIRMED THE ADDITION OF RS.1,24,770/- BY ADOPTING A GP RATE OF 25% AS AGAINST 30%. HIS OBSERVATION IN THIS REGARD IS AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE FACTS OF THE CASE. THE APPELLANT IS NOT ABLE T O DENY THE FACT THAT HE IS NOT ABLE TO PRODUCE ANY SALES REGISTER OR QUA NTITY REGISTER. FURTHER, THE APPELLANT HAS NOT PRODUCED DAY TO DAY STOCK REGISTER AND PURCHASE BILLS AND SALES BILLS TO SUPPORT THE C LAIM THAT HIGH PRICE STICKERS AT 30% TO 45% WERE FIXED ON GARMENT ONLY DURING THE NAVRATRI FESTIVAL PERIOD. I ALSO FIND THAT THE APPELLANT HAS NOT PRODUCED SALES BILLS TO SUBSTANTIATE THE CLAIM THAT THE APPELLANT WAS SELLING ITEMS BY GIVING DISCOUNT RANGING FROM 1 0% TO 15% ON THE SALE PRICE MENTIONED ON THE BAGS. THEREFORE, T HE CONTENTION OF THE APPELLANT THAT THE GROSS PROFIT SHOWN BY THE AP PELLANT IS THE CORRECT GROSS PROFIT EARNED BY THE APPELLANT IS NOT FULLY ACCEPTABLE. HOWEVER, CONSIDERING THE FACT AND SUBMISSIONS OF TH E APPELLANT I HOLD THAT BY ADOPTING THE G.P% AT 30% IS QUITE HIGH , I HOLD THAT IT WOULD BE FAIR AND REASONABLE TO ADOPT THE G.P. PERC ENTAGE FOR THE CURRENT YEAR AT 25%. ACCORDINGLY, THE GROSS PROFIT WORKS OUT TO 25% OF SALES OF RS.30,76,988/- I.E. RS.7,69,247/-. HENCE THE ADDITION OF RS.1,24,770/- (G.P. WORKED OUT RS.7,69, 247 6,44,477 G.P. SHOWN BY THE APPELLANT = 1,24,770) IS CONFIRME D. 5. BEFORE US LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS ALREADY MADE A DISCLOSU RE OF UNACCOUNTED STOCK RELEVANT FOR THE ASSESSMENT YEAR 2004-2005 AN D THEREFORE IF ADDITION ON ACCOUNT OF LOW GP IS DONE THIS YEAR, TH EN IT WOULD BE AMOUNT TO DOUBLE JEOPARDY. LEARNED DR ON THE OTHER HAND S UPPORTED THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS). HE SUBMIT TED THAT NET PROFIT 5 ITA NO.981/AHD/2007 AND ORS. THIS YEAR IS ONLY 5.11% WHEREAS LAST YEAR IT WAS 7. 39%. THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE DIFFERENCE. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DECL INE TO INTERFERE IN THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS ). THE REASONS ARE THAT BASIC RECORDS OF THE ASSESSEE ARE NOT PRODUCED BY HIM. THE STOCK REGISTER AND SALE BILLS SHOWING THE DISCOUNTS ARE I MPORTANT BASIC RECORD WHICH COULD HAVE CONVINCED THE ASSESSING OFFICER TH E REASONS FOR LOW GP. ONCE IT IS NOT DONE, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BOOKS AND LD. COMMISSIONER OF INCOME TAX(APPEAL S) WAS JUSTIFIED IN UPHOLDING THE SAME. REGARDING ESTIMATION OF PRO FIT, WE ARE OF THE VIEW THAT ESTIMATE MADE BY THE AUTHORITIES AT 25% IS QUI TE REASONABLE. NO MATERIAL IS PUT UP BEFORE US TO SHOW THAT ACTUAL PR OFIT EARNED WAS LESS THEN 25%. THE FACT THAT ASSESSEE HAS DECLARED ADDITIONA L INCOME IN SUBSEQUENT YEAR SHOW THAT DECLARING OF PROFIT BY THE ASSESSEE AS PER BOOKS OF ACCOUNTS IS NOT CORRECT. WE ACCORDINGLY UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS) IN THIS REGARD AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 7. THE OTHER ISSUE IS REGARDING SUSTAINING ADDITION OF RS.10,000/- ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. LOOKING TO T HE FACTS AND CIRCUMSTANCES OF THE CASE AND ORDER OF THE LD. COMM ISSIONER OF INCOME TAX(APPEALS) AND THERE BEING NO CONTRARY MATERIAL T O HOLD OTHERWISE, WE CONFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS). ITA NO.981/AHD/2007 8. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) WHO HAS DELETED THE ADDITION OF RS.4,00,000/- FROM THE HANDS OF THE ASSESSEE. THE FACTS RELATING TO THE ADDITIONS ARE THAT THE ASSESSEE DISCLOSED UNDISCLOS ED INVESTMENT IN 6 ITA NO.981/AHD/2007 AND ORS. PURCHASE OF HOUSE IN THE NAME OF HIS WIFE TO THE EX TENT OF RS.4,00,000/-. DURING THE COURSE OF SURVEY, THE STATEMENT OF THE A SSESSEE WAS RECORDED IN WHICH IT WAS STATED THAT ASSESSEE HAS PURCHASED A HOUSE PROPERTY IN THE NAME OF HIS WIFE SMT. DAXABEN PRAKASHKUMAR SHAH FRO M FOUR DIFFERENT PARTIES. TOTAL COST WAS DETERMINED AT RS.6,24,000/ - OVER AND ABOVE WHICH STAMP DUTY WAS PAID. THE ASSESSING OFFICER, HOWEVE R, FOUND THAT A FURTHER INVESTMENT OF RS.4,00,000/- HAS BEEN MADE I S NOT UNDISCLOSED. HE ADDED THE SAME IN THE HANDS OF SMT. DAXABEN P. SHAH ON PROTECTIVE BASIS AND IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BAS IS. THE MATTER TRAVELLED TO THE TRIBUNAL IN THE CASE OF DAXABEN P. SHAH WHICH VIDE ITS ORDER IN ITA NO. 359/A/2009 AND ITA NO.78 AND 4024/ A/2007 UPHELD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APP EALS) IN CONFIRMING AN ADDITION OF RS.2,35,000/- IN THE ASSESSMENT YEAR 2003-2004. IN THIS REGARD, WE REPRODUCE PARA 9 FROM THAT ORDER PRONOUN CED ON 30-10-2009 AS UNDER: 9. WE HAVE HEARD BOTH THE SIDES. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS RECEIVED ALLEGED GIFTS AGGREG ATING TO RS.3,25,000/- AND RS.2,35,000/- DURING THE ASSESSME NT YEAR 2002- 03 AND 2003-04 RESPECTIVELY. THE ASSESSEE FILED CON FIRMATION LETTER, DECLARATION OF GIFT, VOTER IDENTITY CARD OF THE DON ORS, ETC. BUT MOST IMPORTANT THING IS THAT NONE OF THE DONORS PURCHASE D BANK DRAFT FROM THEIR REGULAR BANK A/C. IT WAS CLAIMED THAT TH E BANK DRAFTS WERE PURCHASED IN AHMEDABAD ITSELF, FOR WHICH PAYME NT IS MADE IN CASH. IN THESE CIRCUMSTANCES, GENUINENESS OF THE TR ANSACTIONS IS IN DOUBT. THE REASONING GIVEN BY THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) FOR CONFIRMING THE ADDITION OF RS.2,35,000/- IN THE ASSESSMENT YEAR 2003-04 IS AS UNDER :- 7 ITA NO.981/AHD/2007 AND ORS. FROM THIS, IT IS OBVIOUS THAT, AS MENTIONED BY THE ASSESSING OFFICER IN THE CASE OF ALL THE DONORS OF ALLEGED GIFTS, NON OF THE DONOR APPROACHED TO THE B ANK FOR GETTING A DEMAND DRAFT OF GIFT ALLEGED TO HAVE BEEN RECEIVED BY THE APPELLANT. IT IS VERY IMPORTANT TO NOTE THAT EXCEPT THE FATHER IN LAW AND MOTHER IN LAW OF THE APPELLANT ALL THE DONORS ARE RESIDING HOT ONLY OUTS IDE KALOL BUT OUTSIDE STATE OF GUJARAT THOUGH, IN THE L ETTER DTD. 27.9.2006 OF THE APPELLANT IT HAS BEEN CLAIMED THAT THE DONORS HAD COME WITH CASH AND GIFTS WERE MADE, THERE IS NO DOCUMENTARY EVIDENCE PRODUCED TO ESTABLISH THIS CLAIM MADE BY THE APPELLANT. NEITHER , IT IS ESTABLISHED THAT ANY OF THE DONOR HAD COME WITH CASH AT THE RELEVANT POINT OF TAME, NOR IT IS ESTABLISHE D THAT CASH UTILIZED IN OBTAINING THE DDS FOR ALLEGED GIFT S TO THE APPELLANT BELONGED TO THE ALLEGED DONORS. AS PER THE VERIFICATIONS MADE BY THE ASSESSING OFFI CER, SHRI MUKESH SHAH HAS PLAYED A VITAL ROLE IN OBTAINI NG BANK PAY ORDERS, DEMAND DRAFTS EITHER IN THE NAME O F HIMSELF OR SO CALLED DONORS. IN SUCH CIRCUMSTANCES, IT IS DIFFICULT TO BELIEVE THAT IT WAS THE CASH BROUGHT B Y THE DONORS FROM SUCH DISTANT PLACES FOR MAKING THE GIFT S TO THE APPELLANT. I ALSO AGREE WITH THE OBJECTIONS OF THE ASSESSING OFFICER THAT THE DECLARATION OF GIFT IN T HE FOLLOWING SENTENCE 'VIDE CHEQUE NO............. OF MY BANK ACCOUNT WITH STATE BANK OF INDIA, BANK OF BARODA,' WAS CERTAINLY MISLEADING. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE GENUINENESS OF RE CEIPT OF GIFT BY THE APPELLANT FROM THE ALLEGED DONORS, I S NOT ESTABLISHED. I, THEREFORE, AGREE THAT THE AMOUNT OF ALLEGED GIFT CLAIMED TO HAVE BEEN RECEIVED BY THE APPELLANT FROM VARIOUS PERSONS DURING THE YEAR AS UNDER: - NAME AMOUNT KANIYALAL C. SHAH RS.40,000/- VIMLABEN HAKHADUL JAIN RS.30,000/- MOHANLAL M. JAIN RS.40,000/- KAMLABEN K. SHAH RS.45,000/- FOOTERMAL C. JAIN RS.40,000/- 8 ITA NO.981/AHD/2007 AND ORS. SMT. JIVIBEN F. JAIN RS.40,000/- TOTAL RS.2,35,000/- WHICH IS UNDISCLOSED INCOME OF THE APPELLANT FOR TH E CURRENT YEAR AND THEREFORE, THE ADDITION MADE BY TH E ASSESSING OFFICER OF THIS AMOUNT IS CONFIRMED. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE ASSESSMENT YEAR 2002-03 IS CONT AINED IN PARA 2.4 WHEREIN HE FOLLOWS HIS ORDER OF ASSESSMENT YEA R 2002-03 BECAUSE ACCORDING TO HIM, THE FACTS IN BOTH THE ASS ESSMENT YEARS ARE IDENTICAL. IT IS PERTINENT TO NOTE THAT BEFORE NONE OF THE AUTHORITIES BELOW THE ASSESSEE HAS FURNISHED THE DE TAILS OF BANK A/C./ SOURCE AVAILABLE TO THE VARIOUS DONORS FOR BU YING THE ALLEGED BANK DRAFTS. THERE IS NOT AN IOTA OF EVIDENCE BROUG HT ON RECORD, WHICH INDICATES THAT THE ALLEGED DONORS WERE PRESEN T FOR MAKING DRAFTS AND HAD BROUGHT CASH FROM VARIOUS PLACES. TH E BANK DETAILS OF NONE OF THE DONORS INDICATING WITHDRAWAL OF CASH FOR BUYING BANK DRAFTS WERE MADE AVAILABLE TO ANY OF THE AUTHO RITIES BELOW. NO USEFUL PURPOSE WILL BE SERVED BY ALLOWING ONE MO RE OPPORTUNITY TO ASSESSEE TO EXPLAIN HIS CASE BEFORE A.O. KEEPING IN VIEW OF THE PECULIAR FACTS OF THE CASE, IN OUR CONSIDERED OPINI ON, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN CONFIRMING THE ADDITION OF RS.2,25,000/- AND RS.3,35,000/- IN RESPECT OF ALLEGED GIFTS FOR THE A SSESSMENT YEAR 2002-03 AND 2003-04 RESPECTIVELY. WE, THEREFORE, IN CLINED TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). SINCE TRIBUNAL HAS HELD THAT ADDITION IS TO BE MADE SUBSTANTIVELY IN THE HANDS OF DAXABEN P. SHAH, NO QUESTION ARISES TO TAX IT AGAIN IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE CONFIRMED THE ORD ER OF LD. 9 ITA NO.981/AHD/2007 AND ORS. COMMISSIONER OF INCOME TAX(APPEALS) IN DELETING THE SAME FROM THE HANDS OF THE ASSESSEE AND DISMISS THE APPEAL FILED BY THE REVENUE. CO NO.89/AHD/2007 9. SINCE THIS CROSS OBJECTION IS FILED IN SUPPORT O F THE ORDER THAT LD. COMMISSIONER OF INCOME TAX(APPEALS) IN DELETING THE ADDITION OF RS.4,00,000/- FROM THE HANDS OF THE ASSESSEE, AND T HE SAME ORDER HAS BEEN UPHELD BY US IN ITA NO.981/AHD/2007 AS ABOVE, WE DI SMISS THE CROSS OBJECTION FILED BY THE ASSESSEE AS BEING INFRACTUOU S. 10. THE CO FILED BY THE ASSESSEE IS DISMISSED. ITA NO. 1101/AHD/2007 11. IN THIS CASE THE ONLY ISSUE INVOLVED IS THE ADD ITION OF RS.2,23,894/- ON ACCOUNT OF LOW GP. THE LEARNED ASSESSING OFFICE R REJECTED THE BOOKS OF ACCOUNTS FOR THE SAME REASONS AS HE FOUND IN THE ASSESSMENT YEAR 2003-2004. IN ADDITION HE MENTIONED THAT ASSESSEE HAD UNACCOUNTED INCOME WHICH WAS DECLARED IN THE UNACCOUNTED STOCK AND THEREFORE THERE IS NO REASON TO ACCEPT THE BOOKS OF ACCOUNTS. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE REJECTION OF THE BOOKS FOR THE SAME REASONS. 12. THE ASSESSING OFFICER ESTIMATED THE GP ADDITION BY APPLYING GP RATE OF 30% AS IT WAS DONE IN THE PRECEDING YEAR. THIS RESULTED IN AN ADDITION OF RS.6,37,144/-. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) REDUCED THE GP RATE TO 20% IN THIS REG ARD HE OBSERVED AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE FACTS OF THE CASE. THE APPELLANT IS NOT ABLE T O DENY THE FACT THAT HE IS NOT ABLE TO PRODUCE ANY SALES REGISTER OR QUA NTITY REGISTER. 10 ITA NO.981/AHD/2007 AND ORS. THEREFORE, AS HELD IN THE CASE OF THE APPELLANT IN THE APPEAL FOR A.Y. 2003-04 THE CLAIM OF THE APPELLANT THAT THE GR OSS PROFIT SHOWN BY HIM IS CORRECT IS NOT FULLY ACCEPTABLE. FOR THE CURRENT YEAR IT IS NOTED THAT THE APPELLANT HAD MADE DISCLOSURE OF RS. 9,81,286/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. FURTHER, THE APPELLANT HAS MENTIONED THAT HE IS DEA LING IN SCHOOL UNIFORMS FOR MANY SCHOOLS OF KALOL FOR BOYS AND GIR LS. AND DURING THE YEAR SEVEN SCHOOLS HAVE CHANGED THEIR UNIFORMS. THERE IS INCREASE IN THE TURNOVER ALSO. FURTHER THE APPELLA NT HAD FLOATED A SCHEME OF SALE OF PURCHASE ONE AND GET ONE FREE I N RESPECT OF PANT, SHIRTS, T-SHIRTS. IN SUPPORT OF THIS THE APP ELLANT HAS FILED PHOTO COPY OF BANNER DISPLAYING THE SCHEME AND A FE W BILLS ALSO. IN VIEW OF THE ABOVE POSITION I HOLD THAT THE G.P.% FOR THE CURRENT YEAR IS LIKELY TO BE LOWER THAN THAT OF THE IMMEDIA TE PREVIOUS YEAR I.E. A.Y. 2003-2004. THE ASSESSING OFFICER HAS ADO PTED G.P. AT 30% FOR THE CURRENT YEAR WHICH IS CONSIDERED VERY H IGH. CONSIDERING THE FACTS AND CIRCUMSTANCES AS MENTIONE D ABOVE, I HOLD THAT IT WOULD BE REASONABLE TO ADOPT G.P.% AT 20% FOR THE F.Y. 2003-04 RELEVANT FOR CURRENT A.Y. 2004-05. AC CORDINGLY, THE GROSS PROFIT WORKS OUT TO RS.8,68,371/-. AS THE AP PELLANT HAS ALREADY SHOWN G.P OF RS.6,44,478/-, THE DIFFERENCE OF THE ADDITION OF THE AMOUNT OF RS.2,23,894/- (868371 644478) IS CONFIRMED. 13. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THA T ADDITION SO SUSTAINED IS HIGH WHEREAS LEARNED DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW NO CONTRARY MATE RIAL IS PRODUCED BY THE ASSESSEE TO SHOW THAT GP EARNED IS LESS THEN WH AT IS ESTIMATED BY LD. 11 ITA NO.981/AHD/2007 AND ORS. COMMISSIONER OF INCOME TAX(APPEALS). IN FACT LD. C OMMISSIONER OF INCOME TAX(APPEALS) IS QUITE REASONABLE IN GIVING D ISCOUNT TO THE ASSESSEE DUE TO SCHEME FLOATED BY THE ASSESSEE FOR PURCHASE OF ONE GET ONE FREE. HOWEVER, IT IS NOT KNOWN FOR WHAT PERIO D THIS SCHEME WAS APPLICABLE AND HOW MUCH SALES RESULTED IN THIS PERI OD AND WHAT WAS THE REDUCTION IN PROFITS ON ACCOUNT OF THIS SCHEME. IN ANY CASE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS GIVEN DISCO UNT TO THIS FACT WHICH IS QUITE REASONABLE, THERE IS NO OTHER MATERI AL TO TAKE A DIFFERENT VIEW. ACCORDINGLY, ORDER OF LD. COMMISSIONER OF IN COME TAX(APPEALS) IS CONFIRMED. APPEAL FILED BY THE ASSESSEE IS DISM ISSED. 15. AS A RESULT APPEAL FILED BY THE REVENUE, AS WEL L AS APPEALS AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED . THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 5 TH MARCH, 2010. SD/- SD/- (T K SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 05/03/2010 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.