TMI Blog2011 (5) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained by the assessee was fictitious or contained wrong entry, the Assessing Officer was not entitled to make an average of discount without discarding the actual discount given by the assessee for the relevant year as appearing from the books of account. - I.T.A. No.28 of 2005 - - - Dated:- 19-5-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J. P. Khaitan. For the Respondent: Md. Nizamuddin. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against order dated October 8, 2004 passed by the Income-tax Appellate Tribunal, A Bench, Kolkata, in I.T. (SS) A. No. 53 (Kol) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said closing stock with reference to the wholesale price by deducting therefrom the discounts allowed by the assessee to its customers and the gross profit ratio. f) The gross profit rate was determined by the Assessing Officer at 20.44%. In respect of discounts, the assessee worked out the average discount allowed on the basis of its books of account for the Financial Years 1999-2000 and 2000-2001 at 25.53% and 29.13% respectively. g) In course of enquiry by the Income-tax Department, it was established that the discounts offered by the assessee varied between 18.5% and 33.81%. The Income-tax Department also verified the accounts of the buyers in which the full discount received from the assessee was duly disclosed. However, ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner (Appeals). j) The Tribunal by the order impugned herein held that the stock should be valued by allowing discount @27% being the average of the years 1999-2000 and 2000-2001 and income should be recomputed accordingly. With regard to levy of surcharge, the Tribunal following an order dated October 8, 2004 passed in the case of another assessee held that the surcharge was leviable according to the provisions of the Finance Act. k) Being dissatisfied, the assessee has come up with the present appeal. 3. A Division Bench of this Court at the time of admission of this appeal formulated the following substantial questions of law: i) Whether in a case where stock physically found is in agreement with the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the insertion of the proviso in Section 113 of the Act by the Finance Act, 2002 with effect from June 01, 2002. 4. Mr. Khaitan, the learned Senior Advocate appearing on behalf of the appellant, has strenuously contended before us that the authorities below having found no fault in the books of account of the assessee placed before the Assessing Officer and at the same time, no irregularity having been found in the stock at the time of search and seizure, the authorities below acted without jurisdiction in assessing the income of his client on the basis of average profit. Mr. Khaitan contends that if the books of account are not found to be fictitious or containing false entry, in such a case, the Assessing Officer is left with n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge discount granted by the assessee to its customers. 8. After hearing the learned counsel for the parties and after going through the materials on record, we find that the search party did not visit all the business branches of the appellant and the valuation made by the Department covered only the Kolkata and some of the branches of Tirupur. The figures of the stock at Mumbai, Tirpur (not covered by the Department), Delhi and stocks in transits were supplied by the appellant. The Assessing Officer has accepted the position that the books of account of the appellant were found to be correct. He has further found that the Trial balance sheet and the Profit and Loss account. tallied and has further noted that the gross profit rate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egion or the place of sale and unless, any of the entries relating to such discounts is found to be wrong, the Assessing Officer is bound to accept the actual discount given by the assessee. 11. Thus, the learned Tribunal erred in law in modifying the order of the Commissioner of Income tax (Appeals) by fixing an average of discount for the two years. We, therefore, set aside the aforesaid portion of the order of learned Tribunal below. 12. As regards the question of imposition of surcharge on the block assessment, we find that the said point is concluded by two decisions of the Supreme Court in the cases of CIT Vs. Suresh N. Gupta reported in [2008] 297 ITR 322 (SC) and CIT Vs. Rajiv Bhatara, reported in [2009] 310 ITR 105 (SC) h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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