TMI Blog2009 (7) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... o of appeal: "1. Whether, on the facts and circumstances of the case, was the Income-tax Appellate Tribunal legally justified in holding that both section 145(1) proviso and section 145(2) of the Income-tax Act, 1961, are not applicable in the case and whether the findings of the Income-tax Appellate Tribunal in deleting the additions of Rs. 37,68,113, Rs.5,73,832, Rs. 15,99,123 and Rs. 10,225 are sustainable in the eyes of law? 2. Whether the Income-tax Appellate Tribunal, on the facts and circumstances of the case, is legally correct in holding that the applicability of 22 per cent. on the entire turnover disclosed by the assessee was not justified when admittedly the assessee' s books of account are not reliable nor complete and the net profit could not be correctly and accurately deduced therefrom? 3. Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was legally correct in deleting the addition of Rs. 5,73,832 on account of commission on indirect export sales and whether there was basis for such deletion? Whether the deletion of Rs. 15,99,153 by the Income-tax Appellate Tribunal which was added by the Assessing Officer, on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of book results and applying a net profit rate of 22 per cent. by the assessing authority and disallowance of Rs. 5,71,832 paid by the assessee as commission on indirect export sales. 8. The Tribunal while deleting the addition of Rs. 15,99,158 made by the Assessing Officer on account of alleged suppression in domestic sales has dealt with each and every aspect of the matter and also met the reasoning of the Assessing Officer and was of the opinion that the addition of Rs.15,99,158 made by the Assessing Officer on account of alleged suppression in domestic sales was unjustified. The assessee had claimed commission and discount of Rs. 11,80,488. This commission and discount was ranging between 1 and 7 per cent. in the case of different parties. The assessee explained that on local sale, cash discount of 1 per cent. is allowed to the customers and 3 per cent. agency commission is allowed to the agent. On export sales, agency commission was 5 per cent. except in the case of M/s. Kajriwal Enterprises to whom commission at 7 per cent. was allowed. The Assessing Officer had also noted the complete details of the commission paid by assessee. The details of domestic sales, commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for rejecting the books results and also submissions made on behalf of the assessee before the Departmental authorities as well as before us. The correctness of the declared trading results are supported by regular books of account maintained by the assessee. The assessee has followed recognized and valid method of accounting. Similar method of accounting has been followed by the assessee for the past so many years. The correctness of the books results was always accepted in the past. The accounts of the assessee have been audited by the auditors in accordance with the provisions of the Companies Act and as required under sections 44AB and 80HHC of the Income-tax Act, 1961. These auditors have given unqualified reports. The correctness of the declared results are also supported by other supporting records such as vouchers for sales, purchases and other expenses. The quantitative details are also supported by day-to-day stock record, various registers required to be maintained under the excise laws. The correctness of the declared production and sales have not been doubted by the excise authorities. The Assessing Officer has failed to find any single instance of inflation of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculation of gross profit rate cannot be made unless some specific mistake in the accounts are pointed out. It is not disputed that the turnover and gross profit rate declared by the assessee in the year under consideration is better as compared to preceding year. In all past assessment years from 1983-84 to 1987-88, the books results were accepted as true and correct. In the absence of any specific instances of mistakes in the books of account and other records, the book results cannot be rejected on the basis of any such hypothetical calculations based on erroneous presumptions. 12. The Tribunal has given cogent and convincing reasons while setting aside the finding of the authorities below. The finding recorded by the Tribunal is bused on appreciation of evidence and material available on record. We do not see any good ground to interfere with the findings recorded by the Tribunal. The Tribunal has meticulously examined the evidence on record and we are in agreement with the finding recorded by the Tribunal on the aforesaid issue. 13. The next controversy is with regard to the disallowance of commission of Rs. 5,73,832 paid by the assessee on indirect export sales. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indirect exports also. On a careful consideration of the entire relevant facts, we are of the view that there is absolutely no justification for disallowing commission aggregating to Rs. 5,73,832 paid by the assessee on these two export houses. The same is, therefore, deleted." 14. The fact that the aforesaid two export houses had perhaps claimed deduction under section 80HHC cannot justify the disallowance in the hands of the assessee. It is exclusively within the domain of the traders as to how he should carry on his business. The Revenue authority cannot substitute their views about the manner and mode of carrying on the business. It has been contended by the learned counsel for the respondent that M/s. Kejriwal Enterprises and Chinar Exporter (P.) Ltd. are leading export houses, they secured the export orders and got them executed either by themselves or through others including the assessee. The aforesaid exporters do not retain any margin on the supplies of hand tools made by the assessee-company in execution of their export commitments. Prices paid to the assessee-company for such supplies are the same at which these principal exporters have received the orders. For transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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