TMI Blog2013 (7) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... ing adopted by the assessee is such that the income cannot be properly deduced, the Assessing Officer erred in law in taking recourse to the first proviso to section 145(1) of the Income-tax Act ?" The facts of the case are that the appellant had filed its return for the assessment year 1994-95 on the basis of account books maintained by the appellant. The Assessing Officer, while passing assessment order dated December 29, 1995, had recorded a finding that wrong method was applied by the appellant for calculating the gross profit and net profit. The Assessing Officer, while recording such finding, had compared the various datas furnished for the assessment years 1993-94 and 1994-95 and without giving specific finding in respect of account books, the Assessing Officer in paragraph 2(f) of the order had invoked the provisions of section 145(1) of the Income-tax Act, 1961, and the ratio of the profit which was shown by the appellant at the rate of 19.9 per cent. was enhanced to 21.66 per cent. Learned counsel for the appellant submitted that though the Assessing Officer had invoked the provisions as contained in section 145(1) of the Income-tax Act, 1961, for rejecting the accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following reasons for rejection of the account books for the aforesaid assessment years under section 145(3) of the Income-tax Act, 1961 : "(a) On the perusal of record and discussion during the course of assessment proceedings the following picture emerged : Item 1993-94 1994-95 Raw material (fire-clay) 3454.5 M. T. 3577.7 M. T. Coal 2594.0 M. T. 1689.0 M. T. Finished goods produced 2932.2 M. T. 2995.0 M. T. Yield 848 837 Coal required per unit (finished G) 848 M. T. 563 M. T. Sales 43,94,984 49,43,123 Gross profit (percentage) 24.3% 19% (b) From the above chart, it is clear that the consumption of coal has been drastically reduced by the amount incurred for repairs has gone up to Rs. 3,44,631 as compared to Rs. 2,61,416 and Rs. 2,60,037 claimed in the assessment years 1993-94 and 1992-93, respectively. On being asked, the assessee, vide reply, contended that the gross profit declined due to excessive increase in cost of raw materials and repairs to fixed assets. The above plea of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (Appeals) in the order dated March 27, 1998, had not considered the grounds raised by the appellant before it but in paragraph 4 of the order, the addition made by the Assessing Officer was accepted by the Commissioner of Income-tax (Appeals), assigning no reason. The Income-tax Appellate Tribunal has also not considered the reason for rejecting account books but in paragraph 5 of the order has affirmed the order of the Assessing Officer for rejecting the account books by invoking the provisions of section 145(1) of the Act. In the impugned order, the Tribunal nowhere have considered reasons, for justifying rejection of the account books. From the perusal of the appeal memo filed before the Commissioner of Income-tax (Appeals), written statement filed before the Commissioner of Income-tax (Appeals) and the impugned order dated March 27, 1998, passed by the Commissioner of Income-tax (Appeals) it is clear that the appellant had raised all these grounds before the authority. For rejection of account books, cogent reasons ought to have been assigned by the Assessing Officer. A Division Bench this court in R. J. Trivedi (HUF) v. CIT reported in [1983] 144 ITR 87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proceedings the Tribunal accepted the mistake to this extent that Ramlakhan was not paid on the basis of conversion of truck loads into tonnage. The Tribunal, however, committed another mistake by stating that he was paid on the basis of conversion of cubic feet into tonnage. There is absolutely no material on record for this finding. The labourers working in the mines may have been paid on the basis of cubic feet but as pointed out by us earlier, Ramlakhan was being paid at the rate of Rs. 8.07 per tonne of coal in accordance with the weighment made at the railway weigh-bridge. The finding reached by the Tribunal in sustaining the rejection of books under section 145(2) is thus vitiated by non-consideration of relevant facts and by taking into account irrelevant and non-existent facts. The finding is, therefore, erroneous in law. The Tribunal will have to reconsider the question and to give a fresh finding by considering all the relevant facts." A similar view has been taken by the Patna High Court in MD. Umer v. CIT [1975] 101 ITR 525 (Patna) and also by the Gauhati High Court in Aluminium Industries (P.) Ltd. v. CIT [1995] 80 Taxman 184 (Gauhati). Both the High Courts have h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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