TaxTMI 
TaxTMI 
2010 (4) TMI 83
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....ate preceding year. A notice under Section 143(2) of Income Tax Act, 1961(hereinafter referred to as the Act) was issued to the assessee, which produced its accounts books as well as stock register and also furnished the information sought by the Assessing Officer from time to time. The drop in gross profit ratio was attributed to increase in fabric consumption, increase in processing cost such as fabrication, embroidery, dyeing and bleaching and comparatively low increase in the average sale price. The Assessing Officer rejected the accounts under Section 145(3) of Income Tax Act and computed the gross profit at the estimated rate of 28%, considering that the gross profit declared in the immediate preceding year was 27% and made addi....
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....elying upon the decision of Supreme Court in S.N.Namashivayam Chettiar Vs. CIT, Madras: 38 ITR 579 held that if the method adopted by the assessee was a regularly employed method and was such that the income, profit and gain can be properly deduced therefrom, then such method of accounting, as followed by the assessee, cannot be discarded. The Tribunal also noted that the accounts of the assessee were audited and no discrepancy of accounting had been pointed out. It was also noticed that the Act had not prescribed any specific method of maintaining the stock register and the assessee was maintaining its stock register through which in and out stock movement was clearly verifiable. The Tribunal appreciated that when the assessee is in the bu....
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....ection (3) of Section 145 does not apply to this case. 6. As noted by the Commissioner of Income Tax(Appeals) as well as by the Income Tax Appellate Tribunal, the Assessing Officer has not pointed out any specific defect or discrepancy in the accounts books maintained by the assessee. The Accounts Books, admittedly, were produced before the Assessing Officer for his consideration. This is also not the finding of the Assessing Officer that the account of the assessee were not complete. As regards the assessee not maintaining Stock Register in the form expected by the Assessing Officer, the assessee has given an explanation which has been accepted not only by the Commissioner of Income Tax(Appeals) but also by the Tribunal and both of them h....