TMI Blog2010 (5) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. Held that: even if no such register (stock register) was being maintained by the assessee as is contended by the learned counsel for the appellant (revenue), that by itself does not lead to inference that it was not possible to deduce the true income of the assessee from the accounts maintained by her, nor the accounts can be said to be defective or incomplete for this reason alone. If stock register is not maintained by the assessee that may put the Assessing Officer on guard against the falsity of the return made by the assessee and persuade him to carefully scrutinize the account books of the assessee. But the absence of one register alone does not amount to such a material as would lead to the conclusion that the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at the rate of 1.4% as against gross profit rate of 5.91 % for the preceding year. On being asked to explain the fall in gross profit rate, the assessee attributed the fall in gross profit rate to the increase in the purchase price. The Assessing Officer rejected the explanation given by the assessee, on the ground that no supporting evidence was produced to show increase in the purchase price and decrease in sales. He also noticed that the weight of finished products declared by the assessee, was 319264 kg as against the weight of raw material, which was declared as 311578 kg. When asked to explain, the assessee submitted that after drawing wire, the process goes on to put the wire for enameling, as a result of which the weight of the wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the account books were pointed out, the accounts could not have been rejected and no addition could have been made merely on account of lower profit declared by the assessee. 5. Section 145(3) of Act provides for assessment in the manner prescribed in Section 144 of the Act where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where either the method of accounting provided in sub-Section (1) or the accounting standards as notified under sub-Section (2) having been regularly followed by the assessee. It is not the case of the Revenue that the assessee had not followed either cash or mercantile system of accounting. It is also not the case of the Revenue that the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese circumstances, we fail to appreciate how the accounts, maintained by the assessee, could have been said to be incomplete or inaccurate. In fact, the Assessing Officer had no material before him to treat the accounts of the assessee as defective or incomplete. 7. As regard the marginal increase in the weight of the finished product, the explanation given by the assessee has been accepted not only by Commissioner of Income Tax (appeal) but also by the Income Tax Appellate Tribunal. The Assessing Officer had no material before him on the basis of which it could be said that the weight of the wire does not increase even marginally during the process of enameling. Therefore, he had no justification in law to reject the explanation given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Tribunal, in our view, were justified in holding that the Assessing Officer could not have increased the gross profit ratio merely because it was low as compared to the gross profit ratio of the preceding year. 10. During the course of arguments before us, it was submitted by the learned counsel for the appellant that the assessee was not maintaining the Daily Stock Register. We, however, find no such finding in the assessment order. On the other hand, we note that the Assessee had submitted before the Commissioner of Income Tax (Appeals) that Form 3CD containing all the quantitative details in respect of raw materials as well as the finished goods, duly audited by the Certified Accountant had been placed on record, but, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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