2017 (12) TMI 863

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....n of law : "Whether in the facts and circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in deleting the addition in entirety in spite of being made upon logical basis when it has specifically maintained the application of section 145(3), i.e., rejection of books of account for not portraying true and correct accounts ?" 3. The facts of the case are that the assessee-firm continues to derive income from manufacturing and export of garments. During the year under consideration, on the total turnover of Rs. 6,68,48,332, the assessee had declared gross profit of Rs. 50,45,638 giving a gross profit rate of 7.54 per cent. and net profit of Rs. 53,03,507 at 7.93 per cent., as compared to gross profit ....

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....le basis is based on conjecture and surmises and no evidence is offered as to the mode of arriving at the figures of costing. In fact, the same is also not sustainable and the authorised representative during the course of assessment proceedings on December 14, 2005 himself agreed that a gross profit of 15 to 16 per cent. was a possibility. Thus, in the absence of requisite details as discussed above, the profits of the business cannot be ascertained. Therefore, the gross profit rate of 23 per cent. is applied in the case of the assessee." 6. Counsel for the respondent has relied on the observation made by the Commissioner of Income-tax (Appeals) which reads as under : "I have carefully considered the facts of the case ....

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....nd that there is a substantial difference in the quantum turnover, nature of business, goods manufactured/traded, countries of export, etc., of M/s. Avon Creations and that of the appellant-asses see, as mentioned by the learned authorised representative and noted in the preceding para 2.2(ii). Therefore, it is found that the case of M/s. Avon Creations, taken by the Assessing Officer as a comparable case, for estimating the gross profit in the case of the assessee, was not a fit case for comparison with the case of the assessee. Hence, the gross profit rate declared by M/s. Avon Creations cannot, be applied to the case of the assessee. (i) The learned authorised representative has objected to the action of the Assessing Officer in....