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2014 (2) TMI 604 - MADRAS HIGH COURTExplanation for fall in GP rate – Held that:- The assessee pointed out that when the price of the kappas had increased, there was no corresponding increase in the price of cotton - there was a mix up of different variety of cotton too - The First Appellate Authority rightly came to the conclusion that the allegation made by the Assessing Officer for rejecting the books were too general in nature - the Assessing Officer had not stated that the purchases had not been made nor had rejected the accounts - Relying upon R.M.P.Perianna Pillai & Co., vs. Commissioner of Income Tax [1961 (1) TMI 69 - MADRAS HIGH COURT] - the system of accounting adopted by an assessee could not be rejected - the assessee did not maintain all through the year a separate variety-wise stock account either on the basis of counts of yarn, or prices or classes of goods - the absence of such stock books did not prevent the acceptance of the book results in the previous assessment years - no attempt was made to verify the particulars given by the assessee by way of statements and the only ground on which the book results were rejected was that the gross profits were low – thus, the Department had not proved the case by any substantive materials – Decided in favour of Assessee.
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