TMI Blog2005 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and restoring the addition is perverse? (iii) Whether Tribunal was justified in finding that the estimation is justifiable because the books of account have been rejected which is against the fact as there is no rejection of books of account or book results? (iv) Whether Tribunal was justified in reversing the decision of the Commissioner of Income-tax (Appeals) and restoring the addition?" –said findings are pure findings of fact and do not give rise to any question of law, much less a substantial question of law - appeal dismissed - - - - - Dated:- 12-12-2005 - Judge(s) : D. K. JAIN., HEMANT GUPTA. JUDGMENT The judgment of the court was delivered by D.K. Jain C.J.-This appeal, under section 260A of the Income-tax Act, 1961 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax (Appeals) and restoring the addition of Rs. 2,94,632 as made by the assessing authority?" At the outset, we may note that Mr. P. C. Jain, learned counsel for the assessee, did not press the appeal on proposed questions Nos. (i) and (ii). Accordingly, this appeal is confined to proposed questions Nos. (iii) and (iv). Briefly stated, the background facts, in so far as these are relevant for the aforementioned two questions, are as follows: The assessee is engaged in the business of buying and selling of hessian bags (jute bags) old and new, in different qualities and sizes. The assessee also manufacture these bags as per the market requirements. On October 7, 1996, a survey, under section 133A of the Act, was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner held that there was sufficient material to justify the rejection of the books of account maintained by the assessee. He, however, was of the view that fall in the gross profit rate stood explained by the assessee with reference to the increase in turnover by 80 per cent. as compared to the immediately preceding assessment year. Consequently, he deleted the addition of Rs. 2,94,632. The addition made on account of disallowance of expenses was also reduced by the Commissioner. Being aggrieved, the Revenue took the matter in further appeal to the Tribunal. By the impugned order, the Tribunal has restored the said addition on account of low gross profit rate. The Tribunal has come to the conclusion that the best judgment assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible to lay down the exact circumstances in which these may be rejected as incorrect or unreliable. It is basically a question of fact to be decided on the facts and circumstances of each case. Similarly, a low gross profit rate may not per se lead to an inference that accounts are false but coupled with other relevant circumstances, it does afford a sufficient ground for rejection of the accounts and estimation of profits. In the instant case, the addition made by the Assessing Officer has been restored by the Tribunal not merely on account of low gross profit rate, but because of the cumulative effect of non-maintenance of the stock register and manufacturing account and undervaluation of the closing stock. Coupled with it was the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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