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Issues Involved:
1. Addition of Rs. 96,09,720 in the trading account. 2. Disallowance of Rs. 19,339 on account of foreign travel expenses. Issue 1: Addition of Rs. 96,09,720 in the trading account The Revenue appealed against the order of the Commissioner of Income-tax (Appeals) which deleted the addition of Rs. 96,09,720 made by the Assessing Officer (AO) in the trading account for the assessment year 1989-90. The AO found the Gross Profit (G.P.) rate of 3.73% on sales of Rs. 66.53 crores to be low compared to previous years and suspected suppressed production and sales outside the books. The AO based his addition on higher consumption of raw materials, coal, and electricity without corresponding increase in production, and on the basis of the assessment for the year 1988-89. The Commissioner of Income-tax (Appeals) deleted the addition, noting that the manufacturing process was supervised by excise authorities and that the consumption of raw materials and production varied due to the quality of materials used and other factors. The Commissioner also noted that similar additions in previous years were deleted and accepted by the Revenue without further appeal. The Tribunal upheld the deletion, emphasizing the rule of consistency and noting that the AO did not find any defects in the books of account, which were audited and checked by excise authorities. The Tribunal also noted that the AO did not examine the books of account when produced later, and that the addition was based on hypothetical figures from the previous year's assessment, which was not justified. Issue 2: Disallowance of Rs. 19,339 on account of foreign travel expenses The AO disallowed Rs. 19,339 as not relating to business. The Commissioner of Income-tax (Appeals) deleted the disallowance, noting that the managing director's foreign travel was in connection with the business and authorized by the board of directors. The Tribunal confirmed the deletion as the Departmental Representative could not point out any mistake in the impugned order. Separate Judgment by Accountant Member: The Accountant Member disagreed with the deletion of the addition of Rs. 96,09,720, emphasizing that the assessee did not produce the books of account and other records despite repeated opportunities. He argued that the AO was justified in making the addition based on the analysis of available data and past records, and that the Commissioner of Income-tax (Appeals) should not have accepted the project report without giving the AO an opportunity to comment. Third Member Decision: The Third Member agreed with the then learned Vice-President, emphasizing the rule of consistency and noting that the addition was based on the same reasoning as in the assessment year 1988-89, which was deleted and accepted by the Revenue. The Third Member concluded that the Commissioner of Income-tax (Appeals) rightly deleted the addition of Rs. 96,09,720. Conclusion: The Tribunal upheld the deletion of the addition of Rs. 96,09,720 and the disallowance of Rs. 19,339, dismissing the Revenue's appeal.
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