TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 170
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....e Act'), dated 08/03/ 2013. 2. The facts of the case are stated in brief. The return of income declaring income of Rs. 20,22,040/- had been filed on 15.10.2010, which is processed under section 143(1) on 26.05.2011. Thereafter the case was selected for scrutiny under section 143(3) and the AO has completed the assessment by making additions, based on net profit ratio. The Revenue has taken the following grounds of appeal, which read as under: "1. That on the fact and in the circumstances of the case the Ld. CIT(A) erred in accepting the books of accounts of the assessee and ignoring the fact that the cost of inferior material supplied to M/s. Tata Motors Ltd. should be lower than the declared cost, than proper account of stocks, processi....
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....e Assessing Officer as well as the submissions and arguments put forth on behalf of the appellant. The case of the Assessing Officer is that the net profit declared by the appellant in the Head Office business was comparatively less than that declared in Pune Branch and that in the absence of qualitative records, the deductions and losses claimed in respect of sales to Tata Motors, warranted rejection of book results and application of net profit rate. Whereas the appellant's case is that in view of the different business activities carried in the HO and branches, the margin of the branch and HO is not comparable, that the principal, M/s Tata Sons, being a company of international repute conscious of quality control, had made heavy dedu....
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....g at the conclusion that out of total purchases of scrap, only inferior quality of scrap was supplied to Tata Sons. Having not carrying out such exercise, and having not found any adverse results, the Assessing Officer was not justified in jumping to the conclusion that better quality of scrap must have been sold to some other parties and suppressed profits. (iv) The accounts are apparently supported with quantitative details. Absence of qualitative accounts, on the facts and in the circumstances of the case and its past history, did not by itself render the books of account defective. There is not finding that the purchases are bogus. Neither is there any finding that the expenses debited in the HO account are not supported with bills a....
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....en held that "the books maintained by an assessee in the regular course of business are the prima facie proof unless they are proved false by any other material on record. The assessment cannot be made on the basis of personal opinion". In the case of Sf. Teresa's Oil Mills v. State of Kerala, (1970) 76 IIR 365, 367-8(Ker), it was held that the accounts regularly maintained in the course of business have to be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable. The department has to prove satisfactori ly that account books are unreliable, incorrect or incomplete before it can reject accounts, which may be done by showing that important purchases are omitted therefrom or proper particular....
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.... a net profit rate of 7.23% shown in branch account. The consequent addition to the trading results is hereby deleted and these grounds of appeal of the appellant are allowed." 3. Not being satisfied with the order of the ld. CIT(A), the Revenue is in appeal before us. 4. The ld. DR for the Revenue has primarily reiterated the stand taken by the AO which we have already noted in our earlier para and is not repeated for the sake of brevity. 5. The ld. AR for the assessee has submitted that the AO has not established that sales are suppressed or any item of purchase is inflated, no gainful purpose is served because value of closing stock will have direct bearing on opening stock (thereby the profits) of next year thereby proportionately a....