1978 (12) TMI 61 - AT - Income Tax

Summary

Issues:
1. Trading addition for the assessment years 1968-69 and 1969-70.
2. Disallowance of part of rent for residence for the assessment year 1968-69.

Detailed Analysis:
1. For the assessment years 1968-69 and 1969-70, the primary issue revolved around the trading additions made by the Income Tax Officer (ITO) in various accounts. The ITO had added specific amounts in different trading accounts based on his assessment. Upon appeal, the Appellate Assistant Commissioner (AAC) examined the statements provided by the assessee, highlighting the inclusion of Finance Tax in local purchases and the low gross profit in other accounts. The AAC, referencing previous Tribunal decisions, concluded that the explanations provided by the assessee were reasonable and that the application of section 145 regarding non-maintenance of day-to-day stock register was not warranted. Consequently, the AAC deleted the additions made by the ITO for both years.

2. The secondary issue related to the disallowance of a portion of rent for residence for the assessment year 1968-69. The AAC, after considering the arguments presented by both parties, upheld the deletion of Rs. 1,200 by the AAC in relation to rent for residence. The AAC justified this decision by pointing out that the previous Tribunal decisions were followed, and there was no valid reason to interfere with the AAC's order at the Revenue's instance. Therefore, the ground pertaining to the rent for residence for the assessment year 1968-69 was dismissed.

In the final judgment, the Appellate Tribunal upheld the decisions of the AAC, dismissing the appeals of the Revenue. The Tribunal agreed with the AAC's assessment that the evidence presented by the assessee, coupled with the examination of accounts and quantitative tally, provided a reasonable explanation for the trading additions. The Tribunal emphasized that the absence of a day-to-day stock register did not automatically trigger the application of section 145. Additionally, the Tribunal differentiated the facts of the present case from the case laws cited by the Revenue, asserting that the reasoning behind those cases did not align with the circumstances of the current matter. Ultimately, the Tribunal found no justification to overturn the AAC's orders, leading to the dismissal of the Revenue's appeals.