2017 (11) TMI 734

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.... an error by reversing the observations made by AO, wherein it has been observed as under:- " In the light of aforesaid observations and case laws the books are rejected under provision of Section 145(3) and assessment is framed in the spirit of section 144. The G.P. chart is reproduced below:- A.Y. Turn Over Gross Profit G.P. Rate 2006-07 49506341 17324217 34.99% 2007-08 75250149 25104502 33.36% 2008-09 74720272 17262838 23.10%   When we take a glance over the chart we see that in A.Y. 2007-08 and 2008-09 turnover is almost equal but G.P. is dipped down sizeable. In its reply dated 09.08.2010 the assessee explained that there is slight variation in the profitability under the year is due to market forces which is beyond the control of the assessee but it failed to explain the substantiate, the market forces. So being judicious and considering the totality of the facts and the fact that there cannot be a better compare case than that of the assessee itself. It would be fair and reasonable to apply G.P. rate of 33% on the turnover of Rs. 7,47,20,272/- in the relevant assessment year thereby m....

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....n of books of account according to the provisions of section 145 of the Income tax Act. In the present case also the assessee has not maintained day to day record of consumption of material. No proper records related to sites are maintained out of which true and proper income could have deducted. c) The Hon'ble Supreme Court in case of CIT v/s British Paints India Ltd. 188 ITR 44 has held that whatever may be the method of accounting adopted by the assessee it should disclose true picture of profit and gains. The court has further held that if the account do not give true picture of profit, the AO is duty bound to adopt any such, computation as the deem appropriate for proper determination true income. In the light of aforesaid observation and case laws the books are rejected under provision of section 145(3) and assessment is framed in the spirit of section 144. The G.P. chart is reproduced below:- A.Y. Turn Over Gross Profit G.P. rate 2006-07 49506341 17324217 34.99% 2007-08 75250149 25104502 33.36% 2008-09 74720272 17262838 23.10%   When we take a glance over the chart we see that in A.Y. 2007-08 ....

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....so price. The ld Assessing Officer applied 33% GP without pointed out any specific defects in the books of account or bringing out any material on record. He further relied on the decision of Hon'ble Rajasthan High Court in the case of Gotan Lime Khanij Udhyog (supra) wherein it has been held that rejection of books of account U/s 145(3) does not always lead to an addition in every such circumstances, even if there is fall in GP ratio asACIT Vs. M/s Handmand Paper & Board such. Considering these case laws, the ld CIT(A) restricted the addition, therefore, he prayed to uphold the order of the ld CIT(A). 5. We have heard the rival contentions of both the parties and perused the material available on the record. Whatever defects pointed out by the Assessing Officer is not justified, the rejection of books of account U/s 145(3) of the Act. The assessee's manufacturing processes are so complexed that at every stage, the size, length and width of products changed and also the number of process in the manufacturing of handmade papers but the assessee has maintained proper purchase, sale and other expenses on the basis of bill/vouchers. Therefore, we uphold the order of th....

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.... twenty or more workers, the requirements of the provision are fulfilled. When the provision is clear and unambiguous, there is no need to read anything more into the same, as is sought to be done by the Revenue. This Court in the case of CIT v. V.B. Narania & Co. MANU/GJ/0339/2001 : 171 CTR (Guj) 416 : 252 ITR 884 (Guj), where in the facts of the said case, the ITO has disallowed the claim for deduction under Ss. 80HH and 80J of the Act, on the ground that the assessee got certain processes done from outsiders on the piecemeal basis and that the assessee had not provided regular employment to any person in its manufacturing process, held that the Tribunal was right in coming to the conclusion that the persons doing the work were employed by the assessee because the assessee was controlling not only the work to be done by those persons but also the manner of doing of the work. The Court further held that the Assessing Officer and the AAC were not right in holding that the concerned persons were not employees because they were being paid on piecerate basis or job work basis. In the present case, the Tribunal has found that the assessee has the ultimate control over the affa....