Commissioner Of Income Tax, Jaipur- Iii, Jaipur v. M/S Handmade Paper And Board Industries, Gramodyog Road, Sanganer, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 133 / 2010 Commissioner of Income Tax, Jaipur- III, Jaipur. ----Petitioner Versus M/s Handmade Paper and Board Industries, Gramodyog Road, Sanganer, Jaipur ----Respondent _____________________________________________________ For Petitioner(s) : Mr. Sameer JainFor Respondent(s) : Mr. N.K. Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 03/01/2018 By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal of the assessee. This Court while admitting the matter framed the following questions of law:- “Whether the learned ITAT being the last factfinding body was right in law in reducing the GrossProfit Rate without any evidence inspite ofupholding the application of Section 145(3) forrejection of books of accounts and stock?” In view of the observations made by the Tribunal which reads as under:- “4. We have considered the arguments of the ld.DR, written submissions of the assessee and gonethrough the material available on record. Thesurvey team has observed that the books of account were not found complete on the date of survey andstock position could not be worked out. Also variousdiscrepancies were found in the books of accountavailable during the course of survey. The assesseealso did not produce the total bills of purchases,sales and expenses for reconciliation with the booksof account which were impounded. The AOmentioned at para 2 in his order that as percomputerprintedsheet,thestockofRs.2,30,61,658/- was there whereas as per physicalverification at the time of survey, the stock foundwas of Rs.63,46,048/-. The explanation of theassessee during the course of assessmentproceedings after completion of books of accountwas that stock lying at the time of survey was forRs.2,30,61,658/- on account of raw material, workin progress, finished goods packing material andstore consumables whereas the survey team hasvalued the same at Rs.63,46,028/-. The explanationsubmitted by the assessee was ignored by the AOand there are no basis of the valuation made by theDepartment which could be brought on record bythe AO in his order by the ld. DR in this regard. TheAO also referred that it is not easy to value thestock of the assessee firm as it requires thetechnical knowledge of hand made papers assubmitted by the assessee. In the absence of anybasis for valuation made by the Department and nodefect has been pointed out by the AO in thevaluationmadebytheassesseeatRs.2,30,61,658/-, we are of the view that the AO isnot justified in taking the value of the stock atRs.63,46,048/- which is without any basis andwhatsoever kind. Therefore, the AO is not justifiedin treating the shortage in closing stock to the tuneof Rs.1,74,19,662/- and the same cannot be taxedas income of the assessee. The ld. CIT (A) is alsonot justified in sustaining the addition ofRs.34,83,936/-.” In our considered opinion, while considering Section145(3), the Tribunal has rightly substituted its opinion. We are in complete agreement with the view taken by theTribunal. No interference is called for. Hence, the appeal stands dismissed. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J.