TaxTMI 
TaxTMI 
2013 (7) TMI 388
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....s and in law, the learned Tribunal was justified in allowing the relief of Rs. 8,54,010 out of trading addition of Rs. 8,66,728 made by Assessing Officer by relying on the decision of Howrah Trading Co. (P.) Ltd. v. CIT reported at [1968] 67 ITR 582 (Cal) while approving the action of the Commissioner of Income-tax (Appeals) in rejecting the book result?" The facts relevant for determination of the question involved in this appeal are that the assessment proceedings in relation to the respondent assessee were completed on March 25, 1997, under section 143(3) of the Act, wherein, the Assessing Officer ("the AO"), inter alia, noticed that the assessee had declared gross profit rate of 20.6 per cent. and considered the same to be low as com....
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....r of Income-tax (Appeals) also came to the conclusion that the application of the gross profit rate at 32.42 per cent. was not justified. However, taking the gross profit rate declared by the assessee to be on the lower side, particularly for the general trend/practice of under billing in the marble business, the learned Commissioner of Income-tax (Appeals) put the estimate on the sales of the appellant at Rs. 26 lakhs and, while applying the gross profit rate of 25 per cent. on such sales, put the sustainable addition only at Rs. 12,715. The Revenue questioned the order so passed by the Commissioner of Income-tax (Appeals) before the Income-tax Appellate Tribunal, who by the order impugned came to the conclusion that the Assessing Offic....
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....1 As regards the application of gross profit rate at 32.42 per cent. on the estimated sales, the contention of the appellant found some force. The Assessing Officer has taken the case of M/s. Anil Marbles Pvt. Ltd. as comparable case for estimation of sales and application of gross profit rate. But it appears that the Assessing Officer has forgotten to consider the period of working of that company. It appears that the said company has worked for the whole year whereas the appellant company has worked only for nine months during the year under appeal as the commercial production of the appellant company started only from the third week of June, 1995. Therefore, the sales are bound to be less than that of a company who worked for the whole y....
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....t declared by the appellant appears to be on lower side particularly considering the general trend/practice of under billing in the line of marble business. After considering all these facts, it is held reasonable to estimate the sales of the appellant at Rs. 26 lakhs and apply a gross profit rate of 25 per cent. on such sales. On this basis, the sustainable addition is worked out to Rs. 12,715 (6,50,000-6,37,285)." The Tribunal in its impugned judgment dated October 5, 2005, has approved the approach and reasonings of the Commissioner of Income-tax (Appeals) in the following : "7. After considering the rival submissions and perusing the relevant material on record, it is found as a fact that the purchases made by the assessee are not....
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....By considering the totality of the facts, we are of the considered opinion that the gross profit rate of 25 per cent. applied by the learned Commissioner of Income-tax (Appeals) as against 20.6 per cent. declared by the assessee is reasonable and does not warrant any further increase. This ground is, therefore, not allowed." The passages reproduced herein above make it clear that the Commissioner of Income-tax (Appeals) and then the Tribunal have examined the issue involved in its correct perspective, and have assigned cogent reasons for not approving the order passed by the Assessing Officer in its totality. When the sales declared by the assessee had been accepted by the sales tax authorities and the Assessing Officer failed to brin....