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of <h1>High Court affirms Tribunal's decision on Income-tax Act Chapter XIV-B appeal, no substantial question of law</h1> The High Court of BOMBAY dismissed the appeal and affirmed the Tribunal's decision to delete the additions made under Chapter XIV-B of the Income-tax Act, ... Appeal To High Court, Substantial Question of Law, Block Assessment, Stocks Found During Search Issues:1. Addition made under Chapter XIV-B of the Income-tax Act, 1961.Analysis:The High Court of BOMBAY heard an appeal against the Tribunal's decision to delete an addition made under Chapter XIV-B of the Income-tax Act, 1961. The case revolved around a search that uncovered stock worth Rs. 1,32,52,685 in the assessee's factory/business premises, comprising raw material and finished products. The Assessing Officer recalculated the trading account using a 15% gross profit rate, determining the closing stock should have been Rs. 2,05,90,919 instead of the actual stock of Rs. 1,38,14,855. The appellate authority upheld this decision, leading to an appeal to the Tribunal. The Tribunal found the 15% rate excessive and contradictory, ultimately deleting the additions made under Chapter XIV-B.The Department contended that the Tribunal erred in deleting the addition, arguing that the gross profit rate of 15% should apply based on the tentative trading account for a specific period. However, the High Court disagreed with this assertion. Firstly, the block assessment period was 1984-1995, questioning the justification for solely applying the 15% rate for a partial period in 1995. Secondly, the assessee's explanation regarding competitive pressures affecting the gross profit rate was not adequately considered by the Assessing Officer. Thirdly, while estimates can be used under Chapter XIV-B, an arbitrary approach should be avoided. The lack of evidence supporting the consistent use of a 15% rate throughout 1984-1995 raised doubts about its application. Additionally, the Tribunal highlighted inconsistencies in the Assessing Officer's findings regarding the second addition, further supporting the deletion of the additions under Chapter XIV-B.Ultimately, the High Court found no substantial question of law arising from the case and dismissed the appeal, affirming the Tribunal's decision to delete the additions made under Chapter XIV-B of the Income-tax Act, 1961.
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