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Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding trading addition and rejection of books of account.
The respondent, a partnership firm involved in manufacturing and export, was assessed under Section 143(3) of the Act for the assessment year 2001-02. The assessing officer rejected the books of account due to a decline in Gross Profit Rate (GPR) and added Rs. 20,83,752 based on a GPR of 27%. The Commissioner (Appeals) partly allowed the appeal, deleting the addition as no specific defect in the books of account was pointed out. The Commissioner held that the rejection was unjustified as the appellant was not obligated to maintain detailed records of raw materials due to the variety of products manufactured. The Tribunal upheld this decision, stating that without any defect in the books of account, the assessing officer's addition was unwarranted. The revenue appealed to challenge the deletion of the trading addition, arguing that the appellant failed to provide quantitative details of raw materials despite being given an opportunity. The Tribunal upheld the Commissioner's decision, emphasizing the lack of justification for the assessing officer's addition without specific defects in the books of account. The revenue contended that the books were rightly rejected under Section 145(3) of the Act due to inability to verify the declared GPR of 25.38%. The High Court dismissed the revenue's appeal, noting that no specific defect in the books of account was identified by the assessing officer. The court upheld the findings of the Commissioner and the Tribunal, stating that no substantial question of law arose for determination. The appeal was therefore dismissed.
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