2005 (2) TMI 769 - AT - Income Tax

Tribunal reduces GP addition, emphasizes book accuracy, dismisses revenue appeal.

The Tribunal upheld the CIT(A) order reducing the GP addition by Rs. 3,52,727 out of a total of Rs. 5,52,727. The Tribunal emphasized that a decrease in ... Rejection of accounts Issues Involved: Appeal against CIT(A) order regarding GP addition by Assessing Officer.Summary:The revenue appealed against the CIT(A) order allowing relief of Rs. 3,52,727 out of the total GP addition of Rs. 5,52,727, without providing any findings to reduce the GP addition. The CIT(A) was criticized for not considering the lower GP declared by the assessee compared to the previous year and for not maintaining day-to-day quantitative details and stock register. However, the CIT(A) justified the reduction by stating that the GP did not necessarily correlate with turnover, and no defects were found in the books of account to warrant rejection. The Departmental Representative supported the assessment order, emphasizing the lack of detailed stock register maintenance by the assessee. The counsel for the assessee argued in favor of the CIT(A)'s decision, highlighting that total quantity details were available for all varieties and that there was no legal requirement to maintain daily stock registers for each variety.Upon review, the Tribunal accepted the CIT(A)'s findings, stating that a decrease in GP alone is not sufficient to reject the books of account. They emphasized that the Act does not mandate the maintenance of daily stock registers for each variety, and the Assessing Officer failed to demonstrate any incorrectness or incompleteness in the accounts to justify rejecting the book results. Consequently, the Tribunal dismissed the appeal.