1978 (9) TMI 80 - AT - Income Tax

Summary

Issues:
1. Challenge to AAC's direction to accept book results for the assessment years 1971-72 and 1974-75.
2. Disallowance of claim for loss of goods in transit for the assessment year 1971-72.
3. Disallowance of claim for loss of goods in transit for the assessment year 1974-75.

Analysis:
1. The Tribunal addressed the challenge to the AAC's direction to accept book results for the assessment years 1971-72 and 1974-75. The assessee, a dealer in precious stones, faced issues with the gross profit rate determined by the ITO based on comparable cases. The AAC had set aside the assessment order for the year 1971-72 and directed a fresh assessment due to lack of opportunity for the assessee to produce comparable cases. The Tribunal found that the ITO did not provide valid grounds to reject the explanation for the low gross profit. It was noted that in previous years, book results were accepted despite lower gross profit rates, and the ITO failed to establish the fairness of the adopted gross profit rate. The Tribunal upheld the AAC's decision, citing violations of natural justice and relevant legal principles.

2. Regarding the disallowance of the claim for loss of goods in transit for the assessment year 1971-72, the ITO had disallowed the claim of Rs. 12,104 without providing reasons. The AAC deleted this addition after considering evidence presented by the assessee, including documents showing pilferage of goods in transit and the inability to recover the amount from the French party. The Departmental representative argued that the loss was wrongly allowed, emphasizing discrepancies in the export process. However, the Tribunal agreed with the AAC, noting the failure to establish the identity of missing stones but accepting the genuineness of the loss based on the circumstances and evidence presented.

3. In relation to the disallowance of the claim for loss of goods in transit for the assessment year 1974-75, the ITO disallowed the sum of Rs. 10,666 without stating reasons. The AAC allowed the claim based on evidence provided by the assessee, including postal certificates from India and Australia certifying the loss of goods in transit. The Departmental representative failed to challenge the AAC's finding effectively, and the Tribunal concurred with the AAC's decision, considering the supporting evidence presented by the assessee.

In conclusion, the Tribunal dismissed the Departmental appeals, upholding the AAC's decisions regarding the acceptance of book results and the allowance of claims for loss of goods in transit for both assessment years.