TaxTMI 
TaxTMI 
2017 (5) TMI 195
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.... Ld. CIT(A) has erred in reducing the trading addition to Rs. 2,89,486/- as against addition of Rs. 4,30,48/- despite upholding rejection of book of accounts u/s 145(3) of IT Act, 1961. (ii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting addition of Rs. 49,96,315/- being made on account of ceased liability u/s 41(1) without any substantial evidence and basis. The appellant craves the indulgence to modify, alter, add any other ground of appeal" 2. Briefly stated the facts are that the Return Declaring Income of Rs. 7,32,860/- was filed on 25/6/2012. Subsequently, the case was picked up for scrutiny assessment and the assessment under section 143(3) of the Income-tax Act (her....
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....laced on record. During the course of assessment proceedings, the AO observed following defects into the books of accounts of the appellant: * The appellant does not maintain any stock register. * Purchase rate of any item sold can't be ascertained on the basis of record produced. * Valuation of opening and closing stock is not subject to the verification. * The appellant has made cash sales of Rs. 39,30,361/- without any addresses on sale bills. * The appellant has made URD purchases of Rs. 8,90,590/- and made payment of all these purchases in cash. After issuing a show cause notice, the AO invoked the provision of section 145(3) of the Act and rejected books of accounts of the appellant and ....
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.... the Act. (iv) Now, the moot question is what should be the appropriate GP rate in the instant case under consideration. It is to be noted that in the year under consideration, the turnover of the appellant increased by over 50% from A.Y. 2011-12 and increase of 100% from A.Y. 2010-11. The GP rate declared in AY 2010-11 was 23.06% and this year the declared G.P. rate I more even when sales are doubled. It was the contention of the appellant that in AY 2011-12, the declared G.P. rate was 26.93% which was due to some exceptional profit earned in a few goods and exchange difference. However, the appellant did not elaborate the same. Considering all the facts and circumstances of the case and also looking to the past history of the case, it ....
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.... same in support of this. The Ld. Counsel has drawn our attention to the letter addressed to the banker and same is acknowledged by the creditor. 6.3 We have heard the rival contentions, that the Ld. CIT(A) has decided the issue as under:- "3.2.2 Determination: (i) I have carefully perused the submissions of the appellant and the material placed on record. The AO made the addition of Rs. 49,96,315/- u/s 41(1) of the Act as they were outstanding in the books of accounts of the appellant. During appellant proceedings, it was the contention of the appellant that it is settled law that unpaid liabilities cannot be added to appellant's income by the assessing authorities. Under section 41(1) merely because they remained unpaid for a suf....