TaxTMI 
TaxTMI 
2010 (5) TMI 57
X X X X Extracts X X X X
X X X X Extracts X X X X
....e order passed by Commissioner of Income Tax (Appeals) setting aside the assessment order for the Assessment Year 2003/04. 2. The assessee is engaged in the business of manufacturing copper wire. For the assessment year 2003-04, the assessee filed a return, declaring gross profit at the rate of 1.4% as against gross profit rate of 5.91 % for the preceding year. On being asked to explain the fall in gross profit rate, the assessee attributed the fall in gross profit rate to the increase in the purchase price. The Assessing Officer rejected the explanation given by the assessee, on the ground that no supporting evidence was produced to show increase in the purchase price and decrease in sales. He also noticed that the weight of finishe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s done by her in the preceding years. He, accordingly, held that the Assessing Officer was not justified in rejecting the books of account and in applying the enhanced gross profit ratio. 4. The Tribunal, while rejecting the appeal filed by the Revenue, noted that since no defects in the account books were pointed out, the accounts could not have been rejected and no addition could have been made merely on account of lower profit declared by the assessee. 5. Section 145(3) of Act provides for assessment in the manner prescribed in Section 144 of the Act where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where either the method of accounting provided in sub-Section (1) or t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the course of assessment proceedings. It was for this reason that CIT (Appeals) was satisfied that the assessee had furnished complete details, including quantitative details in respect of purchase of raw material, manufacture of copper wire and sale of the furnished products. In these circumstances, we fail to appreciate how the accounts, maintained by the assessee, could have been said to be incomplete or inaccurate. In fact, the Assessing Officer had no material before him to treat the accounts of the assessee as defective or incomplete. 7. As regard the marginal increase in the weight of the finished product, the explanation given by the assessee has been accepted not only by Commissioner of Income Tax (appeal) but also by the Inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reflected in the accounts books. There is no finding by the Assessing Officer that the finished product was sold by the assessee at a price higher than what was declared in the accounts books. In these circumstances, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, in our view, were justified in holding that the Assessing Officer could not have increased the gross profit ratio merely because it was low as compared to the gross profit ratio of the preceding year. 10. During the course of arguments before us, it was submitted by the learned counsel for the appellant that the assessee was not maintaining the Daily Stock Register. We, however, find no such finding in the assessment order. On the other hand....