TMI Blog2005 (8) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant for the assessment years 1990-91 and 1991-92 should be calculated at the gross profit of the assessment year 1989-90 at 18.71 per cent, and whether the purported findings of the Tribunal in this behalf are based on any material and/or have been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant and/or extraneous materials and/or are otherwise arbitrary, unreasonable and perverse?" The facts: In this case the assessment years involved are 1990-91 and 1991-92. The Assessing Officer had found so far as the year 1990-91 is concerned that no stock register or production register was maintained by the asses-see. Item-wise quantity of goods produced, the opening stock, the closing stock, the purchases and the sales were not verifiable. The stocks are sold at different rates revealing that the same stock was sold at a lower rate and also at a higher rate and that the assessee was unable to explain the item-wise production of different kinds of bricks and failed to explain the fall in average sale figure compared to the last year and the revised tax audit report was also silent about the yield of finished products by commenting "not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of raw materials had gone upward. On this ground, he prays that the order of the learned Tribunal be set aside. He also points out that so far as the assessment year 1991-92 is concerned, there were stock register. But on the ground that it has not been maintained item-wise, therefore, the accounts were rejected. However, even in the assessment order or the order of the learned Tribunal, there was no opinion expressed that the method applied was such that from the accounts maintained the income could not be deduced though the accounts were not found to be incorrect or incomplete. Therefore, according to him, the books of account could not at all be rejected. The submission : The respondent/Department: Mr. Agarwal, learned counsel for the Department, on the other hand, contended that the materials clearly show that there were discrepancies in the stock register and the vouchers and there were materials before the Assessing Officer and the learned Tribunal to lead a reasonable person to take one or the other view and in such a case it cannot be said that the finding arrived at by the learned Tribunal was perverse. The finding of facts arrived at by the learned Tribunal being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer nor the learned Tribunal that the accounts maintained were not correct and complete. On the other hand, it had proceeded to reject the accounts on the ground that the assessee had failed to establish the correctness of the income deduced on the basis of the accounts maintained by the assessee, so far as the assessment year 1990-91 is concerned. The law is well-settled. In order to reject the books of account, the Assessing Officer has to come to an opinion that the method applied is such that the income cannot properly be deduced from the accounts so maintained. It is not a question of establishment by the assessee. It is the opinion of the Assessing Officer which is material. In order to arrive at such a conclusion, it must be shown that the Assessing Officer has taken into consideration the various factors and has not omitted to consider the materials before him and has come to a conclusion that the method applied is such that from the accounts the income could not be deduced. In the present case, as pointed out by Mr. Khaitan, it is not in dispute that these goods were excisable goods and that regular monthly returns used to be submitted before the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for June; similarly, 2821 and 2754, respectively for July, and 3702 and 3575, respectively, for August. Therefore, it cannot be said that the semi-finished product weighed more than the raw materials available with the assessee. In any event, ultimately, there is no finding that in the opinion of the Assessing Officer, the methods applied were such that the income could not be deduced from the books of account maintained by the assessee or that the accounts were not correct or complete. The learned Tribunal, on the other hand, had based its order on the ground that the reasons given in the order of the Commissioner of Income-tax (Appeals) for the assessment year 1991-92, for deleting the addition made by the Assessing Officer were not matching with those of the Assessing Officer given in the assessment order. The difference of reason cannot be a factor for disagreeing with the decision by the Commissioner (Appeals). The question is dependent on the principle of law. The question is to be determined on the basis of the fact applying the principle of law in the context in which the learned Tribunal is supposed to answer the question. In the present case, the question is as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed. In the said decision, it was further held that the profits were low was merely a warning to the Income-tax Officer to look into the accounts more carefully and to show whether there was material to conclude that there was something false in the account books. The mere fact that the profits were low was not material upon which a finding under section 13 can be based, because the assessee may be incompetent or his method of business may be uneconomic. The mere fact that there was no stock register would not lead to hold that the account books were false. The books of account having been accepted as correct and disclosing the true state of affairs, the absence of one register cannot amount to be material and there must be a clear finding before the Income-tax Officer could apply the provisions of the proviso to section 13. The court cannot "leap in the dark" as was held in the Privy Council in CIT v. Kameshwar Singh of Darbhanga (Maharajadhiraja) [1933] 1 ITR 94. In Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC), it was held that if the Tribunal arrives at its own conclusion of facts after due consideration of the evidence before it in respect of a finding of fact, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the absence of stock register coupled with other materials, the Income-tax Officer was of the opinion that the correct profits and gains cannot be deduced, then there would be justification to attract section 13 of the 1922 Act. On the other hand, Mr. Agarwal wanted to rely upon S.N. Namasivayam Chettiar [1960] 38 ITR 579 (SC) to contend that the absence of stock register was justifiable for rejecting the books of account in the facts and circumstances of the case. We, however, do not think that Mr. Agarwal was correct in his submission having regard to the facts and circumstances of this case and the ratio decided in S.N. Namasivayam Chettiar [1960] 38 ITR 579 (SC). The reliance on Dhondiram Dalichand v. CIT [1971] 81 ITR 609 (Bom) also does not help Mr. Agarwal having regard to the facts and circumstances of the case, wherein it was held that in order to reject the accounts, the Assessing Officer has to consider the facts and circumstances of the case and come to the conclusion that the method of accounting employed was such that the income could not properly be deduced therefrom. Similarly, the reliance on Amiya Kumar Roy and Bros. v. CIT [1994] 206 ITR 306 (Cal) does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. In respect of the assessment year 1991-92, the stock register was there, but only on the ground that the item-wise stock register was not maintained, the accounts were sought to be rejected, which is absolutely perverse and cannot be sustained in the absence of any opinion expressed or any finding arrived at that the accounts maintained were incorrect or incomplete or that the method of accounting applied was such that the income could not be deduced. In the absence of any such finding, the account books could not be rejected merely on the ground that item-wise stock was not maintained in the stock register. Order In the result, the appeal, therefore, succeeds and is allowed. The order of the learned Tribunal is hereby set aside. The order of the Commissioner (Appeals) is upheld and affirmed. The question involved in this appeal is answered in the negative for the first part and for the second part in the affirmative. There will, however, be no order as to costs. Urgent xerox certified copy of this judgment be made available to the parties, if applied for, within seven days from the date of such application on usual undertakings. Maharaj Sinha J.- I agree. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
