TaxTMI 
TaxTMI 
2016 (1) TMI 1352
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....nder:- Assessee ground No.3 ''On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in confirming the trading addition of Rs. 14,60,764/- out of Rs. 29,74,480/- made by the AO by confirming the gross profit rate of 50% on declared sales of Rs. 1,51,37,197/- as against 60% applied by the AO and 40.35% declared by the assessee.'' Revenue's solitary ground ''On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in reducing the gross profit rate of 60% applied by the AO to 50% and thereby allowing relief of Rs. 15,14,076/- without substituting the reasons for allowing such relief despite the fact that she has already confirmed the rejection of book profit and books of account.'' 4.1 The common grounds of the assessee for the assessment years 2008- 09 and 2009-10 are as under:- 1. In the facts and circumstances of the case ld. CIT(A) erred in refusing to entertain the additional evidence by rejecting application u/r 46A despite calling a remand report from the ld. AO. 2. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in confirming the tradin....
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...., by order in ITA 910/JP/2012 dtd. 23-4-2015, holding in this behalf as under: 4. Now the assessee as well as the revenue are in appeals before us. The Ld. A.R. for the assessee has submitted that no incriminating documents were found during the course of search. The scope of assessment U/s 153A of the Act is limited to some incriminating documents/evidence found as a result of search. The assessee filed its regular return U/s 139(1) of the Act on 31/10/2007 and notice of selection for scrutiny U/s 143(2) of the Act could be issued latest by 30/09/2008, which was not issued in the case of assessee. Therefore, the assessment of assessee is deemed as completed U/s 143(1) of the Act. After the assessment deemed completed U/s 143(1) of the Act for the year, the department carried out search and seizure operations on 27/08/2008. In search, no any incriminating documents was found to visualize understatement of profit. Consequent to this search and seizure account, notice U/s 153A of the Act was issued for all the years on 19/02/2009. The Hon'ble Jurisdictional High court has analysed the provisions of Section 153A of the Act in detail in the case of Jai Steel (India) vs. ACIT (....
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.... books of account. The ld AR further drawn our attention on business results from A.Y. 2005-06 to 2007- 08 and argued that during the year, not only sale but GP has increased from 40.35% to 44.79%. The sales have increased more than double from A.Y. 2005-06. The assessee has been dealing in medicine and G.P. margin in each kind of medicines remains different. There is throat cut competition in the medicine business, therefore, he prayed to delete the addition confirmed by the ld CIT(A). He further argued that on non maintenance of stock register, the book result cannot be rejected U/s 145(3) of the Act for which he relied upon the decision in the case of CIT Vs. Jas Jack Elegance Exports 324 ITR 95 (Delhi), therefore, rejection of book result U/s 145(3) of the Act is not justified. He further relied upon the following case laws on this issue:- (i) Haridash Parikh Vs. ITO 113 TTJ 274 (ITAT Jodhpur). (ii) Avdesh Pratap Singh Abdul Rehman & Bros Vs. CIT (supra) (iii) Ashok Refractories Pvt. Ltd. Vs. CIT (2005) 279 ITR 475 (Cal). (iv) ST Teresa's Oil Mills Vs. State of Kerala 76 ITR 365 (Ker.). He further clarified that there was mistake in ....
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.... Jack Elegance Exports (supra) has held that no provision either in the Act or in the Rules requiring an assessee carrying business of nature, to maintain the stock register as a part of its account has been brought to notice. The other case laws referred by the assessee on rejection of book and maintenance of stock register are also squarely applicable. Thus, we hold that the addition confirmed by the ld. CIT(A) is not justified. '' 7.2 Similarly, other findings of facts on the similar issues have been also decided by ITAT Jaipur for AY 2005-06 in ITA no. 209/JP/2015 by order dtd. 26-6-2015 which also are related to same search assessments and subsequent penalty proceedings by following observations: ''....It is thus emphatically pleaded that assessee has demonstrated that its assessment had attained finality due to non service of notice u/s 143(2) within limitation period. Admittedly neither any incriminating material was found as a result of search nor it is relied on by ld. AO while disallowing the loss; consequently the 153A assessment and summary disallowance of loss is void ab initio. Hence the impugned 153A assessment and addition/ disallowance of loss is not su....
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....014) 61 SOT 10 (Jodhpur)(URO). 2.5 It is contended that:- (i) Assessee was suffering continuous losses in subsequent years also and ultimately, the business operations of the assessee were closed. Therefore, there can be no design to show loss. Besides in case of disallowance of loss there is no loss to the revenue. Reliance is placed on Hindustan Steels Ltd. Vs. State of Orissa, 83 ITR 26 (SC). Hon'ble Apex Court has held that - Penalty shall not be imposed merely because it is lawful to do so. Even if a minimum penalty is prescribed the authority shall exercise the discretion judicially and on consideration of all the relevant circumstances; the penalty should not be imposed when there is technical or venial breach of the provisions. (ii) Similarly penalty cannot be levied merely on the ground that the assessee has not filed appeal against the addition, not filing appeal does not mean that the issue is not debatable. The Hon'ble Karnatka High Court in the case of CIT V Manjunath Cotton and Ginning Factory 2013- TIOL-536-HC-Kar/263 CTR 153 held that penalty is not automatic even if tax liability is admitted meaning thereby that no appeal against order. F....
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....ision of Hon'ble Jurisdictional High Court in the case of Jai Steel (India) Vs ACIT (2013) 259 CTR (Raj) 281 and it is by now settled law that the scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. In search and seizure operations admittedly no incriminating material belonging to this assessee was found. It is by now settled law that the scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. (iv)There is no justifiable basis to disbelieve the assessee's contention that the books of accounts could not be produced as they were in the custody of Shri Atul Burman who also replied that he has left the company. Besides ld. CIT(A) in AY 2007-08 has endorsed the fact of disputes between directors and assessee's sufficient cause in not producing the books of accounts. (v) Assessee's contention that in search assessments of other group cases which were in their control, all the documents and books were duly produced is not rebutted. There is no reason to assume as to why assessee will not produce the books of a loss making concern. This also indicate that non prod....
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....ently there was a patch up and assesse produced books of account by way of additional evidence. 5. There is no justification for ld. CIT(A) in refusing to admit additional evidence despite the fact remand reports were called and to ignoring the fact that in some years same books were admitted as additional evidence and no discrepancies were indicated by ld. AO. Similarly ld. CIT(A) has given self-contradictory findings in some years by holding that a/c books couldn't be produced due to sufficient reasons and in some years holding that they were deliberately not produced. Besides ld. AO in remand report has not raised serious issue in this behalf. 6. Merely non production of day to day stock register for various inventories cannot be basis for rejecting the books u/s 145(3). 7. Valid reasons have been explained for fluctuation in GP% from year to year which has been accepted by ITAT. 8. The additions in questions are not based on any incriminating material, inquiry or cross verification but on the basis of review of earlier assessment orders. 9. Ld. AO in the name of rejecting books results and disturbing GP% has only endeavored to wipe o....