2003 (11) TMI 550 - AT - Income Tax

Summary

Issues:
Appeal against order of CIT(A) confirming part of addition in trading account.

Analysis:
The appeal before the Appellate Tribunal ITAT JODHPUR involved the objection raised by the assessee against the order of CIT(A) confirming a portion of the addition made in the trading account. The counsel for the assessee argued that the Gross Profit (GP) rate declared by the assessee for assessment years 1990-91 and 1991-92 was 10.8% and 10.9% respectively. However, in the assessment year 1991-92, the Assessing Officer applied a GP rate of 12.5%, which was later reduced by CIT(A), accepting the GP rate of 10.9% declared by the assessee. The counsel contended that since the revenue did not appeal against the CIT(A)'s decision, the assessment for the subsequent year, where the GP rate was also declared at 10.9%, should have been completed based on the assessee's declared rate, considering the past history of the case.

The Departmental Representative (DR) supported the CIT(A)'s decision to delete a part of the addition made by the Assessing Officer. After hearing both parties and examining the facts and submissions, the Tribunal concluded that since the revenue had accepted the GP rate of 10.9% in the previous assessment year, the trading results should not have been disturbed without strong reasons. Finding no strong reasons provided by the revenue authorities to justify the adjustment, the Tribunal held that the CIT(A) was not justified in upholding the addition made by the Assessing Officer. Consequently, the Tribunal allowed the appeal of the assessee, deleting the disputed portion of the addition in the trading account.

This judgment highlights the importance of consistency in assessment procedures and the significance of strong justifications for any deviations from past practices. It underscores the principle that trading results should not be altered without substantial reasons, especially when previous rates have been accepted. The decision serves as a reminder of the necessity for tax authorities to provide clear and valid grounds for any adjustments made during assessments to ensure fairness and adherence to established precedents.