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- Discrepancies in sales figures and method of accounting - Question of registration for the firm Analysis: 1. The first issue pertains to the discrepancies in sales figures and the method of accounting followed by the firm. The Income Tax Officer (ITO) noted differences between the sales figures reported by the assessee and the purchases recorded by Associated Cement Co. The ITO believed there was suppression of sales and set aside the assessment for further examination. The appellate authority, however, accepted the assessee's explanation that the difference arose due to differing accounting methods between the parties. The ITAT upheld this finding, stating that the ITO should reconsider the method of accounting during reassessment. Consequently, the appeal challenging the ITO's estimation of sales was dismissed. 2. The second issue involves the question of registration for the firm. The ITO initially denied registration based on the belief of sales suppression and certain provisions in the firm's documents. The first appellate authority disagreed, finding no suppression of sales and clarifying the profit-sharing mechanism among partners. The ITAT concurred with the appellate authority, emphasizing that even if the accounting method was incorrect, it did not imply unaccounted profits. Citing legal precedents, the ITAT highlighted that without concrete evidence of undisclosed profits, there could be no presumption of such profits. The ITAT also rejected the department's plea to reconsider the registration order based on subsequent assessments, as the existing facts did not warrant registration rejection. Consequently, the appeal challenging the registration denial was also dismissed. In conclusion, both appeals filed by the firm were dismissed by the ITAT, affirming the findings of the appellate authority regarding discrepancies in sales figures and the denial of registration based on alleged sales suppression.
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