Mohamadkassim Abubakar Bhornia, Surat vs Assessee

.Mohammadkassim Abubakar Vs Income-tax Officer, Ward 2(3), Bhorania, Surat. 4/2352, Doriawad, Salabatpura, Surat. (Appellant) (Respondent) PA No. AAMPB 8635L

Appellant by Shri Rajesh Upadhyay, AR Respondent by Shri Roop Chand, Sr.DR

Date of hearing: 24/4/2015 Date of pronouncement: 22/5/2015

ORDER

PER Shri Rajpal Yadav, Judicial Member.

The assessee is in appeal before us against the order of ld.

CIT(A) dated 18.2.2011 passed for AY 2007-08. Though the

assessee has taken three grounds of appeal, but his grievance

revolves around a single issue, whereby he has pleaded that ld.

CIT(A) has erred in confirming the GP addition of Rs.18,48,618/- after

upholding the action of AO of rejecting book results of the assessee. ITA No. 1265/Ahd/2011 2 Asst. Year 2007-08

2. Brief facts of the case are that assessee has filed his return of

income on 31.10.2007 declaring total income of Rs.2,97,922/-. The

case of the assessee was selected for scrutiny assessment and a

notice under section 143(2) was issued and served upon the

assessee. On scrutiny of the accounts it revealed that assessee had

shown G.P. at 0.90% from a total turnover of Rs.4,24,44,871/-

whereas in the immediately preceding year, he has shown GP at

11.45% from a total turnover of Rs.38,11,227/-. According to the AO

there is a sharp fall in GP by 10.55% in comparison to last year. The

AO rejected the book result of the assessee. He estimated the

income by adopting average GP of last three years. The average GP

of last three years is 5.29% of the total turnover. It worked out to

4.39% and accordingly he made an addition of Rs.18,63,330/-.

3. On appeal, the CIT(A) has partly granted the relief. The ld. first

appellate authority has confirmed the addition to the extent of

Rs.18,48,618/- as against Rs.18,63,330/- made by the AO.

4. With the assistance of ld. representatives, we have gone

through the record carefully. The ld. AO has rejected the book result ITA No. 1265/Ahd/2011 3 Asst. Year 2007-08

of the assessee simply for two reasons namely -(a) the assessee did

not maintain day to day stock register & (b) the assessee failed to

produce purchase and sales bills. The ld. counsel for the assessee

contended that purchase and sales bills were impounded by the

Director General, Central Excise Intelligence, Regional Unit, Baroda.

The AO would have called for the bills from that authority but he did

not take any step in this connection. The assessee is unable to lay

his hands on these bills. The ld. counsel for the assessee submitted

that photo copies of the bills can be produced if an opportunity is

provided to the assessee.

5. The ld. DR on the other hand, relied on the orders of Revenue

authorities below.

6. On due consideration of the facts and circumstances we find

that this plea was taken up before the ld. CIT(A) also. The ld. first

appellate authority has simply rejected this plea on the ground that it

is not a proper justification for not producing the purchase and sales

bills. We fail to understand, how it cannot be the justification. Once

the purchase and sales bills are impounded by an authority, unless

they are handed over, how the assessee can be expected to produce ITA No. 1265/Ahd/2011 4 Asst. Year 2007-08

those bills. The ld. CIT(A) instead of calling those bills from the

Central Excise Authorities, drew an adverse inference against the

assessee. It is not expected from the quashi judicial authority. If the

bills have been gone through and thereafter some defects were

pointed out by the AO then the stand of the AO can be appreciated

on this count. Taking into consideration all these facts and

circumstances, we are of the view that ends of justice would meet if

we set aside the impugned orders and restore this issue to the file of

AO for readjudication. The assessee will be at liberty to produce the

copies of the purchase and sales bills. The AO shall have a fresh look

on the dispute and on all the materials. He shall provide due

opportunity of hearing to the assessee. The observations made by us

will not impair or injure the case of AO and will not cause any

prejudice to the defence/explanation of the assessee.

7. In the result, the appeal of the assessee is allowed for statistical

purposes.

Order pronounced in the open Court on 22/5/2015

Sd/- Sd/-

(G. D. Agarwal) (Rajpal Yadav) Vice President Judicial Member ITA No. 1265/Ahd/2011 5 Asst. Year 2007-08

Mahata/-

Copy of the order forwarded to: 1. The Appellant 2. The Respondent 3. The CIT concerned 4. The CIT(A) concerned 5. The DR, ITAT, Ahmedabad 6. Guard File BY ORDER

Dy. Registrar, ITAT, Ahmedabad

1. Date of dictation: 18/5/2015

2. Date on which the typed draft is placed before the Dictating Member: 19/5/2015 other Member:

3. Date on which approved draft comes to the Sr. P. S./P.S.:

4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________

5. Date on which the fair order comes back to the Sr. P.S./P.S.:

6. Date on which the file goes to the Bench Clerk:

7. Date on which the file goes to the Head Clerk:

8. The date on which the file goes to the Assistant Registrar for signature on the order:

9. Date of Despatch of the Order: