2012 (4) TMI 842

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.... the book results, as declared by the assessee, had remained unsubstantiated in the absence of stock register. Hence the Assessing Officer was justified in taking an adverse view as per Section 114 of the Indian Evidence Act. Thus, ld. CIT(A) has erred in not following the decision of the Hon'ble Supreme Court in the case of S.N. Namasivayam Chettiar IT (1960) 38 ITR 579 (SC) and the decision of the Hon'ble Bombay High Court in the case of Kishnichand Chellaram V. CIT (1974) 114 ITR 671 (Bom) relied upon by the Assessing Officer. 2. In the facts and circumstances of the case, ld. CIT(A) has erred in accepting the GP rate shown by the assessee without appreciating the fact that the book results, as declared by the assessee, ....

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....) 59 ITR 733 and by the Kerala High Court in M. Durai Raj's case (1972) 83 ITR 484. The assessee explained the falling GP rate by stating that there was increase in sales and increase in labour charges. The Assessing Officer did not find force in the submissions and rejected the books of account. In the absence of stock register, the books of account were rejected and GP rate of 7.45% was applied. 3. Before the ld. CIT(A), it was contended that the reason for fall in GP rate was explained and complete documents were furnished before the Assessing Officer. A chart showing GP rate for the earlier year was also furnished. The ld. CIT(A) observed that the GP rate was 2.06% and 5.76 in Assessment Years 2004-05 and 2005-06. He further obser....