2012 (1) TMI 81

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....tted the present appeal on the following substantial questions of law:   1.Whether the Tribunal has committed substantial illegality by not considering the grounds raised by the appellant in terms of objection filed before the Assessment Authority?   2.Whether the Tribunal has committed substantial illegality by relying upon the material of assessment of previous year though, no reliance could have been placed on the material of assessment of previous year?   3. The brief facts of the case are that the assessee is a registered firm and engaged in manufacturing and sale of Khandsari sugar. During the assessment year under consideration, the assessee filed return of income showing total loss of Rs.2,92,480/=. During sc....

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....by the Tribunal is totally illegal and invalid.   6. According to the learned counsel for assessee-appellant, for the assessment year 1991-92, production cost increased to Rs.612.49 in comparison to the earlier year, where it was 539.42. Thus, there was a difference of Rs.73.07, which comes to 13.54% increase. Similarly, the sale price had also increased during the assessment year under consideration to Rs.721.26 in comparison to last year, where it was 689.67% and difference was only Rs.31.59, which comes to 4.58% per quintal. Thus, he submits that the production cost increased about three items against the sale price. In these circumstances, no addition can be made by the A.O. pertaining to the G. P. rate without assigned any reas....

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....he impugned order passed by the Tribunal may kindly be set aside.   10. On the other hand, Sri D.D. Chopra, learned counsel for the Department supported the order of the lower authority as well as the impugned order passed by the Tribunal. He submits that the books of account were not properly maintained by the assessee. The verification of vouchers was not possible specially pertaining to the consumable items. In these circumstances, the A.O. was not having any option except to reject the books of accounts, so the A.O. has rightly applied Section 145(2) of the Income-tax Act and estimated the sale as well as the G.P. rate. The G.P. rate is based on last year gross profit and is lesser to last year.   11. We have heard both ....