TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 904
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....the assessee ignoring the fact that the A.O, during the course of the assessment proceedings, established that the assessee has inflated the opening stock for AY 2012-13 to the tune of Rs. 1,91,86,326 to deflate the profit. 2. On the facts and in circumstances of the case, and in the law, the Ld. CIT(A) has erred in not appreciating the fact that the adjustments made by AO to opening stock of current year was on account of difference in quantity as well as value of stocks as reported in the financials of assessee for A.Y. 2011-12 and for A.Y. 2012-13. 3. For the above mentioned reason and any other reasons that may be urged at the time of hearing, it is requested that the order of the CIT(A) be quashed and that of the A.O. be restored. 4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary." 3. The brief facts of this issue are that the assessee is an individual and proprietor of M/s. Aayush Overseas engaged in the business of export of fabrics. She had filed return of income for the A.Y.2012-13 on 25/09/2012 declaring total income of Rs. 9,07,426/- together with the tax audit report in form 3CB and 3CD and its annexures. The a....
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.... was pleaded by the assessee that Clause 24(a) of Tax Audit report deals with particulars of loan accepted during the year and does not deal with particulars of loan repaid during the year. It was submitted that particulars of loan repaid during the year are to be reported in response to Clause 24(b) of form 3CD and accordingly, there was no mistake which had crept in in the tax audit report. Moreover, in Annexure D of tax audit report was stated to be correctly filled because it only reports the transactions from the parties from whom loans have been accepted during the year and in case the parties from whom loans have been accepted during the year were not squared up during the year, the same remark appears. Admittedly, the loan outstanding from other relatives was accepted during the year and those loans were never squared up during the year. With these facts, the assessee pleaded that there was no mistake in Annexure-D as alleged by the ld. AO. The ld. AO however, did not agree to any of these contentions submitted by the assessee. 3.4. Similarly, as far as discrepancy in the quantity chart of closing stock on 31/03/2011 is concerned with that of the opening stock as on 01/04/....
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.... had made the purchases and had export sales. The entire turnover of the appellant was through export sales and as a supporting evidence he has shown that he has credited the duty drawback and the DEPB license amount totalling to Rs. 2,47,68,736/-. The assessee did not have any local sales during the year, it was only a typographical error that the sales have been shown under the head local sales Instead of export sales. The books of account which have been duly audited cannot be rejected on the basis of a typographical error in the presentation. As regards the discrepancy of the bank balance, it was explained that the appellant has had bank balance of Rs. 41,01,046/- with Dena Bank and NIL balance with Bank of India. But while reporting in the Schedule "E‟, by mistake the reporting was done vice versa. This again could not be a ground to reject the books of account. Clarification about repayment of loans from relatives as observed by the AO has also been given by the learned counsel. The issue is clear if one goes through the clause 24(a) and clause 24(b) of form 3 CD. As regards the variation in the opening stock, it was explained that there were errors in giving the quanti....
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....ssessee and if he does, he has to give concrete reasons as to why the assessee should have made more profit. Without pointing out any defects, the AO cannot reject the books of account and estimate the profit of the assessee. The Hon'ble High Court of Allahabad in the case of CIT vs. UP State Food and Essential Commodities 39 raxman.rnm 106 (Allahabad) held that 'lower GP rate cannot be a ground for rejection of books nor any addition could be made merely on the basis of it.' Similar view has been held by the same High Court in the case of the CIT vs. Hanuman Sugar (Khandsari) Mills Private Ltd 38 Taxmann.com 53 (Allahabad). In view of the above discussion, the appeal of the assessee is allowed. 4. Aggrieved, the revenue is in appeal before us. 5. We have heard rival submissions and perused the materials available on record. We find from the elaborate facts and various discrepancies narrated hereinabove together with the explanations given by the assessee both before the ld. AO as well as before the ld. CIT(A), we find that all the discrepancies pointed out were only typographical errors and do not have any impact in any manner whatsoever on the computation of total i....