TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 966
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....e appellant submitted that the AO has proceeded on the basis that the assessee has not maintained day-to-day stock register and there are serious discrepancies in the stock register. He contended that the AO has wrongly assessed the income on the basis of the stock register, as there were differences as compared to the audited books of account. He submitted that the estimated gross income is wrongly assessed. He further submitted that this order of the AO was carried in appeal before CIT (Appeals), who observed as under:- "4. I have considered the facts of the case, Section 145 (2) is applicable when no proper accounting method is followed or where the books of account are neither complete nor correct. In this case, the change of method of accounting on account of modvat cannot be a reason for rejecting the books of account especially there is nothing to hold that the change in accounting method of modvat is a malafide act on the part of the appellant. Further, the arguments raised by the appellant in respect of various defects pointed out by the assessing officer are correct. In this case, even if any section was applicable that it was proviso to Section 145 and not section 145 (....
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.... committed an error in passing the impugned order. In support of his submissions, he has relied upon the decision of this Court in Commissioner of Income-tax-IV v. Symphony Comfort Systems Ltd. reported in [2013] 35 Taxmann.com 533 (Gujarat), and a decision of Delhi High Court in Commissioner of Incometax- XII v. Smt.Poonam Rani reported in [2010] 192 Taxman 167 (Delhi). 6. Mr.Parikh, learned counsel for the respondent has taken us through the Assessment Order, wherein a table with regard to Quality Purchase and Quality Consumption is given. He submitted that there was a difference as per the audited books of account compared with the stock register. He contended that serious discrepancies are found by the AO. He contended that after examining the books of account of the assessee, the AO has given these findings and observed as under:- "(vii) The assessee failed to substantiate reasons for astronomical fall in G.P. Rate. The reasons ascribed by the assessee are not satisfactory and hence I reject the same. Further, the reply to my various notice including last and final show cause notice given by the assessee are also not satisfactory. The assessee failed to substantiate with vo....
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....that all the records are maintained on computer including by the government and semi government organizations. Even if, records are maintained on computer is not ground to reject the explanation of the assessee. The AO should have verified the entries from the computerized records also to point out any defect thereon. In the absence of any specific defect pointed out in the books of accounts and the records maintained on computer, the AO was not justified in rejecting the books results, or to enhance the gross profit rate. Accordingly, there is no merit in this ground of appeal of the revenue. The same is accordingly, dismissed." From the above, it can be seen that the entire issue is based on appreciation of evidence on record. No question of law, therefore, arises particularly when the Commissioner (Appeals) as well as the Tribunal concurrently held in favour of the assessee. Issue No.2 pertains to the additions made by the Assessing Officer on account of excessive expenses. The Commissioner (Appeals) as well as the Tribunal, however were of the opinion that such additions were not justified. The Tribunal while upholding the view of the Commissioner (Appeals), made following ....
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.... maintained by her, nor the accounts can be said to be defective or incomplete for this reason alone. If stock register is not maintained by the assessee that may put the Assessing Officer on guard against the falsity of the return made by the assessee and persuade him to carefully scrutinize the account books of the assessee. But the absence of one register alone does not amount to such a material as would lead to the conclusion that the account books were incomplete or inaccurate. Similarly, if the rate of gross profit declared by the assessee in a particular period is lower as compared to the gross profit declared by him in the preceding year, that may alert the Assessing Officer and serve as a warning to him, to look into the accounts more carefully and to look for some material which could lead to the conclusion that the accounts maintained by the assessee were not correct. But, a low rate of gross profit, in the absence of any material pointing towards falsehood of the accounts books, cannot by itself be a ground to reject the account books under Section 145(3) of the Act." 10. In view of above observations and considering the facts of the case, we are of the opinion that t....