TaxTMI 
TaxTMI 
2017 (6) TMI 15
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....2. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 2,05,715/- made u/s 36(1)(va) of the Act in respect of employees' contribution to EPF/VPF, read with section 2(24)(x) of the Act. 3. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing." 3. The brief facts qua the first issue are that, the assessee company is engaged in the business of retail trading through chain of departmental stores under the name of style of 'Big Apple'. The Assessing Officer noted that in this year there was fall in G.P. rate as compared to the earlier assessment year and noted the following comparative results:- F.Y. Turnover in Rs. Gross Profit in Rs. G.P.Rate 2005-06 9205034 1860287 20.21% 2006-07 157158588 20360147 12.95% In response to the show cause notice issued by the Assessing Officer, the assessee submitted details of month wise purchase and sales and also month wise chart of expenses debited to the profit and loss account, which has been incorporated at page 2 of the assessment order. Apart from that the assessee has also given very el....
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.... made very elaborate submissions objecting to the various observations made by the Assessing Officer and also explaining the reasons for fall in G.P. rate which was for the sake of ready reference is reproduced here:- "(a) Since it is a chain of departmental stores and numerous items are dealt in comprising of vegetables, stationery, grocery, cosmetics etc. and number of items available in any departmental stores which is running thousands, the auditor has simply pointed out that these details could not be annexed with the audit report. The auditor did not state that the assessee company was not maintaining stock register. Moreover, the turnover of all individual items was less than 15% of gross turnover and as such it was not necessary to give the quantitative information for any item in the Tax Audit Report as per guidance note on Tax Audit issued by The Institute of Chartered Accountants of India. However, it was categorically stated before the Assessing Officer that stock registers are maintained and all the purchases and sales are duly vouched and supported with bills and duly accounted for in the books of account as duly recorded by the Assessing Officer in the Asses....
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....em of verification of physical stocks with reference to inventory as per records on * periodical basis. During the year the said verification was carried out in respect of 5 stores and for the balance number of stores the exercise of physical verification of stocks was carried out in the subsequent year. The shortage of stock was found on basis of physical verification was apportioned for the year ended 31/03/2007 on the basis of sales turnover to arrive at the correct profitability for the relevant year. We are enclosing a statement showing such shortages in respect of various stores and warehouses on the basis of which shortage of stock amounting to Rs. 67,01,889/- was reduced from the value of stock as per stock records as on 31/03/2007. Please note that the inventory of stock was taken on the basis of values as per stock registers as reduced by the amount of shortage on the basis of physical verification as mentioned above. We are producing the item-wise working of variance report in respect of numerous items dealt in various stores during the year, on basis of which your goodself will appreciate that the inventory was taken on the correct basis. Please note that the same value....
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.... Apart from above submissions, the rejection of books of account was challenged on legal grounds. 6. The Learned CIT(Appeals) after considering the entire submissions made by the assessee and also the reasoning given by the Assessing Officer in the assessment order, noted that in the assessee's own case, the Tribunal in the A.Y. 2009-10 on similar reasoning and on facts has decided the issue in favour of the assessee by holding that the assessee's books of account cannot be rejected on grounds taken by the Assessing Officer. The relevant observations and finding of the Learned CIT(Appeals) in this regard reads as under:- "3.1 I have carefully considered the facts of the case and the submissions made by the Counsel of the appellant. The assessee company was engaged in the business of retail trade through a chain of stores, departmental stores under the brand name "Big Apple". This store was conceptualized as a retail chain of convenience stores catering to daily needs of the people. The stores offer variety of products including FMCG, home care products, grocery, fruits and vegetables. It is observed from the assessment records that the Assessing Officer has made the addition ....
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....VAT in the closing stock of F.Y. 2007-08. However, amount shown in the balance sheet excludes value of VAT. We further find that Ld. Commissioner of Income Tax (A) is not correct in giving the finding that GP has gone down in this case by comparing to the results for A.Y. 2006-07. The preceding 4 years results as under:- " It can be seen that the GP rate has improved significantly from previousyear. A.Y. 2006-07 20. 121% A.Y. 2007-08 12.95% A.Y. 2008-09 9.03% A.Y. 2009-10 13.63% Furthermore, it has been the observation of the Ld. Commissioner of Income Tax (A) that there is huge increase in expenses. In this regard, the assessee submitted that cost has come down in respect of various expenses and increase is only in respect of claim and other services. That in fact the increase in rent and other services were on account of opening new stores in respect of details were given. Furthermore, the entire claim of expenditure is supported from the audited accounts and the Assessing Officer has not found any mistakes or irregularity in respect of any part of the claim of the expenses. As mentioned earlier, assessee's submission has cogency that proper stoc....
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.... material to reject the books of account and disturb the trading account. Apart from that, we find that the Tribunal in assessee's own case for the A.Y. 2009-10 on similar set of facts has deleted the said ad hoc addition in trading account and also set aside the AO's similar reasoning for rejection of books of accounts. No distinguishing features have been pointed out by the ld. DR before us. Therefore, under these facts, we do not find any reason to deviate from the finding of the Learned CIT(Appeals) which in turn is also based on the order of the Tribunal in assessee's own case on similar set of facts. Accordingly, the order of the Learned CIT(Appeals) is affirmed and the ground raised by the Revenue is dismissed. 9. As regard the second issue is concerned, we find that the ld. Assessing Officer has made the addition on the ground that the Employees contribution to EPF/VPF amounting to Rs. 2,05,715/- for the month of February, 2007 was not deposited within the due date under the respective Act and accordingly, he had added the same u/s 2(24)(x) r.w.s. 36(1)(va). 10. Before the Learned CIT(Appeals), the assessee had submitted that the deposits of EPF/VPF was made before th....