TaxTMI 
TaxTMI 
2018 (1) TMI 593
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.... the turnover declared by the assessee by holding that the Assessing Officer has failed to bring on record any adverse material to justify the quantification of undisclosed turnover and he also reduced the G.P. rate from 8.5% and adopted by Assessing Officer to 8% on the declared turnover and sustained the addition of Rs. 7,34,784/- on account of G.P. and the ld. CIT(A) also sustained the addition of Rs. 10,27,500/- made U/s 68 of the Act. 4. Now the assessee is in appeal before the ITAT by taking following grounds of appeal: "1. That on the facts and in the circumstances of the case Ld. CIT(A) Alwar has grossly erred in law and facts in upholding best judgment assessment u/s 144 based on pure guess without reference to any evidence or material at all, such assessment is liable to be quashed. Estimate of income must be fair, reasonable and intelligent well- grounded. 2. That on the facts and in the circumstances of the case Ld. CIT(A) Alwar has grossly erred in law and facts in confirming trading additions of Rs. 7,34,983/- by applying GP 8% on declared turnover without any material facts on record and therefore additions is without justification. 3. T....
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....e material to justify the quantification of undisclosed turnover. Once the turnover has been accepted as per books of account and no specific defect has been pointed out in expenses claimed in P&L account then the declared G.P. of the assessee deserve to be accepted. He pleaded that in absence of any specific defects in the various expenses claimed by the assessee, the revenue authorities were not justified in estimating the G.P. without any basis. He also relied on the decision of Hon'ble ITAT Delhi 'G' Bench in the case of ITO Vs. Sai International in ITA No. 1406 (Delhi) of 2012 for the proposition that when the assessee is maintaining proper books of account with fully vouched vouchers and no defect has been pointed out nor any adverse material on record on the basis of which the G.P. can be enhanced, in such a situation, the G.P. cannot be varied or be compared from the preceding years and the Hon'ble ITAT held that such addition to the gross profit is erroneous. It was also held that provisions of Section 145(2) cannot be invoked where complete books of account are maintained and most of the vouchers are external vouchers as held in the case of Smt. P.K. Jain ITO (1999) 22 Ta....
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....ial Co. P. Ltd. V, CIT (1977) 108 ITR 424 (Cal)]. An AO is not flattered by technical rules of evidence and pleasing and he is entitled to act on material which may not be accepted as evidence in a court of law. Nevertheless, the AO is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support an assessment u/s 143 (3). The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in case of Seth Gurmukh Singh V. CIT (1944), 12 ITR 393 (Lah) [ Sec, Dhakeswari Cotton Mills Ltd. V. CIT (1954) 26 ITR 775, 782(SC)]. AO mentioned in his order that stock register and confirmation of creditors for goods is not produced during the assessment, it is not the justifiable ground that to reject the books of accounts. Mere non maintenance of stock cannot be the valid ground for rejection of books of accounts as held in the case of Tiveni Pharma (2004) 85 TTJ 950 (ITAT, Jaipur Bench Third Member Bench) ITA No. 133/JP/2001 - "Where verifiable records of opening stock, purchases, and closing stock were available there was no justificatio....
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....under Rule 46A of the Income Tax Rules, 1962 (in short the Rules) to admit the additional evidences. These evidences were remanded to the Assessing Officer for examination. The remand report obtained by the ld. CIT(A) was confronted to the assessee and the assessee has filed counter comments on the same. The Assessing Officer during the remand reports hearing has mentioned following documents, which was submitted by the assessee before him: a. Bank Account Statement of document/ evidences submitted of assessee in which loan cheque was deposited. b. Bank A/c Statement of Suresh Chand Choudhary - Urban Cooperative Bank out of which loan was given for creditworthiness with Id for identification. c. Photo Copy of the Banker's cheque. d. Self Confirmation by assessee on ledger of unsecured loan. e. Financial Statements and Accounts of assessee. f. Affidavit of creditor Saresh Chared accounts. g. Confirmation of Creditors The ld AR also submitted that the assessee was able to discharge the onus of proving the identity, creditworthiness and genuineness of the transactions as required U/s 68 of the Act. The assessee has ....