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2015 (8) TMI 1098 - RAJASTHAN HIGH COURT

2015 (8) TMI 1098 - RAJASTHAN HIGH COURT - TMI - Rejection of books of accounts - estimation of income - trading addition - applying GP Rate - CIT(A) reduced the trading addition by adopting GP Rate of 1.75% AY 2008-09 and 1.50% for 2009-10 - Tribunal held that the manner in which the record was maintained, the books of accounts could not have been rejected and accordingly even the trading addition, which was sustained and upheld by the CIT(A), was deleted - Held that:- Tribunal, which is the ul .....

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e the AO in which no discrepancy was found by the AO. The Tribunal has found that the production of mustard oil is a continuous process and the seeds are put into the milling for continuous oil production. The Tribunal has further found that 80% of its mustard oil is by way of trading sale and neither discrepancies were noticed by the AO in either purchase or sale nor any sale or purchase, found unrecorded. The Tribunal also found that the books of accounts had been maintained in the same manner .....

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out of the order of the Tribunal. - Decided against revenue. - DB Income Tax Appeal No. 122/2015, DB Income Tax Appeal No. 121/2015 - Dated:- 30-7-2015 - Ajay Rastogi And J. K. Ranka, JJ. For the Appellant : Mr Sameer Jain Adv For the Respondent : None ORDER By The Court (Per Hon'ble Ranka, J.): 1. Both these income tax appeals u/Sec. 260A of the Income Tax Act, by the appellant-Revenue are directed against order dt.13/02/2015 passed by the Income Tax Appellate Tribunal, Jaipur Bench (for sh .....

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books of accounts supported by supporting material and accounts are audited. The assessee is also maintaining complete details of production of edible oil and stock register/production register in quantitative details of the trading account, which was placed before the Assessing Officer (for short, 'AO'). 4. During the course of assessment proceedings, the AO, while perusing the stock register, found that there were certain discrepancies mainly (i) that the stock register/ production re .....

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that the stock register/ production register is not verifiable, is not maintained in proper manner and the assessee could manipulate the production according to its convenience and true profits were not deducible. 5. The assessee furnished explanation but the AO was not satisfied with the explanation so offered and ultimately rejected the books of accounts u/Sec. 145(3) of the Act and came to the conclusion that since the trading results are not verifiable and therefore, proper profits cannot b .....

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d the matter in appeal before the Commissioner of Income Tax (Appeals) (for short, 'CIT(A)') who upheld the finding of the AO that the books of accounts have rightly been rejected, however, reduced the trading addition by adopting GP Rate of 1.75% upholding the addition of ₹ 2,80,383/- in the Assesssment Year 2008-09 and GP Rate of 1.50% upholing the trading addition of ₹ 8,82,962/- in the Assessment Year 2009-10. 7. Both the AO as well as the assessee carried the matter in f .....

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he Tribunal erred in coming to its own reasoning and accepted that the stock register/ production register was just and proper. He contended that there was no material before the Tribunal to come to this conclusion and a finding of fact was reached by the AO as well as the first appellate authority that the books of accounts were not full proof and the finding of the Tribunal changed without any basis and evidence, is perverse. He further contended that qualitative details/ production ought to h .....

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iew, the Tribunal, which is the ultimate final fact finding authority, after analyzing the material again placed before it and having gone into the issue once again has come to the conclusion that merely because qualitative record was not maintained and on this premise, the books of accounts could not have been rejected. It is also an admitted fact that mustard seed is only single commodity used by the assessee for manufacturing of mustard oil and the Tribunal noticed that the assessee filed yie .....

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been maintained in the same manner as in the past and the assessee cannot be expected to stop the plant as and when the new lot of mustard seed is subjected to crushing as manufacturing of mustard oil is a continuous process. The Tribunal has also found as a finding of fact that except quality, quantity wise stock details has been maintained but no other defect was noticed by the AO in the quantitative details and after noticing the above fact, has come to the conclusion that the books of accoun .....

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htly so, even otherwise, minor discrepancies cannot result into rejection of books of accounts. 10. Leave apart the above, in our view, what conclusions are to be reached is independent of the results shown in the books of accounts if any maintained by the assessee. Section 145 only provides the basis on which computation of income is to be made for the purpose of determining the amount of tax payable by an assessee. The provision by itself does not deal with the addition or deletion in the inco .....

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