TMI Blog2016 (7) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant is not in a position to dislodge the findings of fact recorded by the Tribunal by pointing out any material to the contrary, nor is it the case of the revenue that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. Under the circumstances, in the absence of any perversity being pointed out in the findings of fact recorded by the Tribunal after appreciating the material on record, the conclusion arrived at by the Tribunal being based upon findings of fact, does not give rise to any question of law, much less, a substantial question of law warranting interference. - Decided against revenue - Tax Appeal No. 412 of 2016 - - - Dated:- 6-5-2016 - Harsha Devani And G. R. Udhw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit of the assessee and made addition of ₹ 31,31,87,129/- being 5% of net turnover considering the same as suppression of gross profit. He further disallowed interest of ₹ 1,88,84,000/- and depreciation of capital goods of ₹ 62,23,134/- and computed the book profit at ₹ 2,15,36,320/- as against the book profit of ₹ 2,02,69,269/- as declared by the assessee. The assessee carried the matter in appeal before the Commissioner (Appeals), who, after considering the submissions of the assessee, deleted the addition made on account of estimation of gross profit by holding that the Assessing Officer was not justified in rejecting the books of account. He, however, sustained the addition made on account of underval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily some amount of guess work involved in a best judgment assessment, and it is the assessee himself who is to be blamed as he did not submit proper accounts. It was, accordingly, urged that the appeal does give rise to a substantial question of law as proposed or as may be formulated by the court. 4. On the other hand, Mr. J. P. Shah, learned counsel appearing on behalf of the respondent on caveat supported the impugned order by submitting that the Tribunal has concurred with the findings of fact recorded by the Commissioner (Appeals) and that in essence, the impugned order is based upon the findings recorded by the Tribunal upon appreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubted or made any adverse remarks with reference to the yield of yarn/grey cloth of the appellant company. This would mean that the Assessing Officer has fully accepted the purchase, sales, consumption, shortage, etc., of the appellant company. The Assessing Officer could not quantify any particular item of deduction as disallowable item for the tax purposes. In other words, Assessing Officer could not pinpoint any specific item in the working results for a specific addition in the assessment as disallowable item of expenditure etc. The only point of addition pointed out is with respect to undervaluation of WIP. This clearly supports the argument that the book results were rejected by the assessing Officer on insignificant grounds. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad gathered and was required to give the assessee an opportunity of being heard before making the assessment, of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment. It is also settled position of law that the books of accounts cannot be rejected on insignificant grounds. The AO should point out the specific defects, whereby the accounts of the assessee cannot be treated as correct or complete giving rise to distorted figure of GP. .... ..... 4.3 ... ... ... The case of the assessee had been that the fall in Gross Profit was due to increase in the cost of raw material and decrease in sale realization. We find that the AO did not give any finding on this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished goods, which is subjected to inspection and audit. In our considered view, the rejecting of books of accounts should not be in a mechanical fashion, the AO has to come to a definite conclusion that the accounts so placed before him are not correct or not complete, consequently, it has distorted the true picture of profit. The AO is required to make analysis of each item and factor which has impact on the profit of the assessee. Assuming that a particular item of account is found to be not correct or complete, the AO is required to find out its impact on the profit of the assessee, if it is found that there is no impact or very minuscule impact on profit. Such defect becomes insignificant. In such a situation, there would be no need o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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