2008 (3) TMI 251 - HC - Income Tax

Whether ITAT is right in reducing the G.P. rate from 16.16% to 12.94% ignoring the Section 132(4A) - while taking into consideration the goods returned by the assessee and it was observed that if the said amount is reduced then the GP rate would come to 12.94% - CIT (A) was justified in holding the deposits in the bank accounts as sale proceeds - CIT (A) was justified in applying GP @ 12.94% in respect of unrecorded sales order of ITAT is justified - revenue appeal dismissed

Summary

Issues:
1. Appeal filed by the revenue under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal (ITAT) regarding the Gross Profit (G.P.) rate reduction.
2. Dismissal of a similar appeal by the revenue for the Assessment Year 1990-91 by the High Court.

Analysis:
1. The High Court dealt with an appeal filed by the revenue challenging the ITAT's order reducing the Gross Profit (G.P.) rate from 16.16% to 12.94% for the Assessment Year 1991-92. The substantial question of law raised was whether the ITAT was correct in reducing the G.P. rate while ignoring the provisions of Section 132(4A) of the Income Tax Act, 1961. The Court noted that the ITAT had disposed of two appeals, one filed by the assessee for the Assessment Year 1990-91 and the other by the revenue for the Assessment Year 1991-92, through a common order due to identical factual and legal issues. The Court observed that a similar appeal by the revenue for the Assessment Year 1990-91 had been dismissed by the same Court, upholding the findings of the Commissioner of Income Tax (Appeals) and the ITAT regarding the G.P. rate reduction based on factual considerations relating to goods returned by the assessee.

2. The Court referenced the dismissal of a previous appeal by the revenue for the Assessment Year 1990-91, where the Commissioner of Income Tax (Appeals) had reduced the G.P. rate from 15.47% to 12.94% after considering goods returned by the assessee. The ITAT upheld this decision, emphasizing the similarity of transactions with another concern and justifying the application of the 12.94% G.P. rate. The Court, in line with the previous judgment, dismissed the current appeal for the Assessment Year 1991-92, as the issue and reasoning were the same as in the earlier case. The Court concluded that no substantial question of law arose for consideration, leading to the dismissal of the appeal.

This detailed analysis of the judgment highlights the key issues, legal arguments, and the Court's reasoning in dismissing the appeal filed by the revenue regarding the reduction of the Gross Profit rate, in line with the previous decision for the Assessment Year 1990-91.