Mastermind Publication (India) Pvt. Ltd. C/o M.L. Dhawan & Co. 326, Thapar Nagar, Meerut PAN AADCM3466G Vs. ACIT Circle-1, Meerut. (Appellant) (Respondent) DCIT Circle-1, Aayakar Bhawan, Bhainsali Ground, Delhi Road, Meerut Vs. Mastermind Publication (India) Pvt. Ltd. 40, Jal Devi Nagar, Garh Road, Meerut PAN AADCM3466G Assessee by : Shri S.K. Jain, Advocate Department by : Shri Amit Jain, Sr. DR Date of Hearing 26/02/2018 Date of pronouncement 28/02/2018 2 PER AMIT SHUKLA, J.M. The aforesaid cross appeals have been filed by the assessee against the impugned order dated 14.3.2016 passed by Ld. CIT(A) Meerut for the assessment year 2012-13. The assessee is mainly aggrieved by estimation of gross profit rate of 12% as against Gross Profit declared at 9.99% by the assessee and also rejection of books of account whereas the revenue is in appeal with regard to the relief given by the Ld. CIT(A) by adopting the GP rate of 12% in place of 15% as estimated by the AO. The brief facts of the case are that assessee company is engaged in the business of publication of books. It has been maintaining regular books of accounts which was subject to audit u/s 44AB. The AO, noted that assessee is not being maintaining any product / stock register and therefore he came to the conclusion that financial results declared by the assessee on the basis of books of accounts are not reliable and accordingly he applied GP rate of 15% instead of 9.99% shown by the assessee on a turn over of Rs. 24,95,67,691/- as declared by the assessee and thereby difference amounting to Rs. 1,25,01,424/- was added. Ld. CIT(A) has reduced the GP rate @ 12% by taking the average result and GP rate of the preceding years which was around 11.6%. Before us Ld. Counsel for the assessee submitted that the Tribunal in assessees own case for asstt. year 2010-11 and 2012-13 has held that books of accounts and 3 trading result cannot be rejected mainly on the ground that stock register has not been maintained. Similar nature of addition by estimation of GP rate has been deleted. In support he filed a copy of order dated 15.3.2016 in ITA No. 6641/Del/2014 and ITA No. 129/Del/2015.

2. On the other hand Ld. DR strongly relied upon the order. After considering the relevant finding given in the impugned order as well as material placed on record, we find that assessee has been maintaining books of accounts like cash book, ledger accounts, purchase inventories, vouchers for expenses and details of opening stock and closing stock. These books of accounts have been subjected to audit and based on that trading and profit loss account has been prepared. On a turn over of Rs. 24,95,67,691/- assessee has shown GP rate of 9.99%. The addition has been made by rejecting the trading result on the ground that assessee does not maintain stock register and accordingly Ld. CIT(A) has been estimated on 15% which has been reduced to 12% by the Ld. CIT(A). It has been pointed out before us that assessee is not maintaining the stock register since starting of the business and looking to the nature of assessees business it was not physically possible to maintain stock register. We find that similar issue has come up before the Tribunal in assessees own case wherein 4 the Tribunal has deleted the said addition similar nature of addition in the following manner :-

The Id. OR could not point out any infirmity in the order of Ld. CIT(A). Further, we are also of the view that in absence of any latent} patent and serious defect in the books of account of the assessee it cannot be rejected. Furthermore as per office note attached with the order of the AO it is noted that confirmation of sundry creditors has been obtained by issuing notice u/s 133(6) of the Income Tax Act. This shows that all third party enquiries also confirms proper booking of purchases and maintenance of accounts. Subsequently} the month wise quantitative details alongwith opening and closing stock were also verified by the AO. The comparative chart of gross profit is submitted by the assessee at page 133 of his paper book wherein starting from Assessment Year 2003-04 to 2010-11 consistently the assessee has shown gross profit from 6.35% to 7.09% and for Assessment Year 2003-04 assessment has been made u/s 143(3) of the. Further, the nature of the business of the assessee is publication of the books and assessee submitted that it is not feasible for maintenance of regular stock account, this facts was not controverted by AO. Further merely non maintenance of stock register cannot be the basis of rejecting the books of accounts of the assessee when the complete details of purchases, sales and stock is available and on verification no defects are noticed. In view of the above facts, we do not any infirmity in the order of the Id.CIT (A) and confirm the deletion of addition of 5 Rs.51258801/ - by rejecting the books of accounts and estimating GP ratio @ 35 %.

3. The Tribunal has categorically held that in the nature of assessees business which is publication of books it is not physical for maintaining stock register account and merely non maintaining of stock register cannot lead to rejection of books of accounts. Thus following the same judicial precedents, we hold that for this year also the trading result cannot be disturbed on the ground that stock register has not been maintained. Accordingly the addition made by the AO and sustained by the Ld. CIT(A) is deleted. Consequently appeal filed by the assessee is allowed and revenues appeal is dismissed.

4. In the result appeal filed by the assessee is allowed and revenues appeal is dismissed. Order pronounced in the open court on 28 th February, 2018. sd/- sd/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28 /02/2018 Veena Copy forwarded to

1. Applicant

2. Respondent

3. CIT 6

4. CIT (A)

5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi