TaxTMI 
TaxTMI 
2006 (9) TMI 149
X X X X Extracts X X X X
X X X X Extracts X X X X
.... giving a specific finding that the accounts of the appellant were not correct and complete and/or that the income cannot be properly deduced from the . accounting method employed by the appellant? (b) Whether, on the facts and circumstances of the case, the Tribunal was justified in upholding the determination of notional profits by the Assessing Officer on the basis of pure estimates? (c) Whether, on the facts and circumstances of the case the order impugned against was perverse and for which reason the order dated May 31, 2002, to the extent appealed against is liable to be set aside and quashed?" 3. We have heard Mr. A. K. Saraf, learned senior counsel for the appellant, and also Mr. U. Bhuyan, learned counsel for the Revenue. 4. The appellant carries on the business of stock and share brokership having its office at Fancy Bazar, Guwahati and owns two firms, namely- M/s. Tokofin and Associate and M/s. Mittal Investors. In pursuance of the search conducted in the business as well as residential premises of the appellant on October 22, 1992, and October 23, 1992, books of account, share certificates, cash amounts were found. The appellant filed his return ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nded the issue relating to addition of Rs. 3,86,435/- on account of undisclosed investments on shares for decision afresh by the Assessing Officer. As regards addition of Rs. 20,51,718/- by the Assessing Officer on account of profit, the learned Income-tax Appellate Tribunal reversed the findings of the Commissioner of Income-tax (Appeals). The Tribunal held that the Assessing Officer was justified in taking 1 per cent. And 1/2 per cent. as profits on transactions of shares of the clients and brokers. 7. In this appeal, the assessee has challenged the order of the learned Tribunal confirming the assessment order in so far it relates to addition of Rs. 20,51,718/- on account of profits based upon turnover from clients and brokers. Dr. Saraf argued that the addition of Rs. 20,51,718/- has not been consistent with the books of account duly kept and maintained by the assessee. The books of account were produced before the Assessing Officer, and the Assessing Officer after examination of the same could not detect any discrepancy or error. No objection was raised as to the admissibility of the contents of the books of account. According to Dr. Saraf, no brokerage was involved for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....There cannot be any fixed jacket formulae for assessment of income. The Commissioner of Income-tax (Appeals) found that the appellant was employing a proper and regular accounting method and his profits could be deduced from the books of account which were complete and correct, and no discrepancy could be detected by the Assessing Officer. Therefore, there was no scope for any notional assessment of profits at a fixed rate. The relevant observation of the Commissioner of Income-tax (Appeals) is quoted below: "I have considered the submissions of the authorised representative in detail and find that the appellant was employing a proper and regular accounting method and his profit could be properly deduced from the books of account. The accounts were complete and correctly maintained and no discrepancy was detected by the Assessing Officer. Therefore, the Assessing Officer does not appear to be at all justified in making an addition merely on the basis of other parties more so he has not detected any defect in the accounts maintained by the appellant which had been regularly maintained and following the same accounting method. Reliance can be placed on the hon'ble Suprem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....out the percentage of profit appears to be contrary to appendix A to regulation 14 as well as the established practice of the Gauhati Stock Exchange Limited that no brokerage is involved for transactions between one broker with another at the floor of the stock exchange. Therefore, outright rejection of the assessee's case appears to be contrary to the established principles of law. The Assessing Officer was apparently in error in computing profits in respect of the transactions with other brokers at 1/2 per cent. since the provisions of regulation 14 and the established practice of the Gauhati Stock Exchange have not been taken into consideration. Similarly, the computation of profit at the rate of 1 per cent. in respect transactions with clients on notional basis is also not sustainable in law. 13. Mr. Bhuyan, learned counsel for the Revenue submitted that the Tribunal being the final authority of facts has decided the matter in favour of the Revenue and that this court in exercise of its powers under section 260A may not interfere with the findings of fact as it involves no substantial question of law. Mr. Bhuyan relied upon the judgment in Deputy CIT v. Marudhar Hotels P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....84, the hon'ble Supreme Court observed that if the appraisal of evidence by the trial court suffers from material irregularities and is based on inadmissible evidence or on conjectures and surmises, the appellate court is entitled to interfere with the findings of fact. The Supreme Court held that the first appeal is a valuable right of the parties and unless restricted by law, the whole case therein is open for rehearing both on questions of fact and law. The judgment of the appellate court must, therefore, reflect its conscious application of mind and the findings supported by reasons on all the issues. It has further been observed that as a matter of law if the appraisal of the evidence by the trial court suffers from a material irregularity and is based on inadmissible evidence, or on conjectures and surmises, the appellate court is entitled to interfere with the findings of fact. This judgment was rendered in the context of interpretation of section 100 of the Code of Civil Procedure. In CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) relied upon by the Commissioner of Income-tax (Appeals), it has been made clear by the hon'ble Supreme Court that the law does not oblige ....