2000 (3) TMI 205 - AT - Income Tax

Tribunal rules against Assessing Officer, excludes evidence, profits deduced from accounts, section 145(1) not applicable.

The Tribunal found the Assessing Officer's reasoning flawed and excluded certain evidence due to a violation of natural justice principles. It held that ... Rejection Of Accounts, Method Of Accounting Issues involved: Appeal regarding addition on account of low G.P. Summary: The appeals involved a common issue of addition on account of low G.P. The Assessing Officer rejected the assessee's explanation for low profits, reconstructed the trading account, and made additions to the income. The CIT(A) upheld the application of section 145(1) but reduced the ad hoc additions. The Tribunal found that the Assessing Officer's reasoning was flawed as past history showed consistent G.P. rates, and comparable cases were not properly confronted to the assessee. The Tribunal excluded certain instances as evidence due to a violation of natural justice principles. It was held that profits could be deduced from the maintained accounts, and section 145(1) was not applicable. Consequently, the additions made by the CIT(A) were deleted, and the appeals of the assessees were allowed while the revenue's appeals were dismissed.