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TMI Blog2010 (5) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed by Commissioner of Income Tax (Appeals) setting aside the assessment order for the Assessment Year 2003/04. 2. The assessee is engaged in the business of manufacturing copper wire. For the assessment year 2003-04, the assessee filed a return, declaring gross profit at the rate of 1.4% as against gross profit rate of 5.91 % for the preceding year. On being asked to explain the fall in gross profit rate, the assessee attributed the fall in gross profit rate to the increase in the purchase price. The Assessing Officer rejected the explanation given by the assessee, on the ground that no supporting evidence was produced to show increase in the purchase price and decrease in sales. He also noticed that the weight of finish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as done by her in the preceding years. He, accordingly, held that the Assessing Officer was not justified in rejecting the books of account and in applying the enhanced gross profit ratio. 4. The Tribunal, while rejecting the appeal filed by the Revenue, noted that since no defects in the account books were pointed out, the accounts could not have been rejected and no addition could have been made merely on account of lower profit declared by the assessee. 5. Section 145(3) of Act provides for assessment in the manner prescribed in Section 144 of the Act where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee or where either the method of accounting provided in sub-Section (1) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of assessment proceedings. It was for this reason that CIT (Appeals) was satisfied that the assessee had furnished complete details, including quantitative details in respect of purchase of raw material, manufacture of copper wire and sale of the furnished products. In these circumstances, we fail to appreciate how the accounts, maintained by the assessee, could have been said to be incomplete or inaccurate. In fact, the Assessing Officer had no material before him to treat the accounts of the assessee as defective or incomplete. 7. As regard the marginal increase in the weight of the finished product, the explanation given by the assessee has been accepted not only by Commissioner of Income Tax (appeal) but also by the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reflected in the accounts books. There is no finding by the Assessing Officer that the finished product was sold by the assessee at a price higher than what was declared in the accounts books. In these circumstances, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, in our view, were justified in holding that the Assessing Officer could not have increased the gross profit ratio merely because it was low as compared to the gross profit ratio of the preceding year. 10. During the course of arguments before us, it was submitted by the learned counsel for the appellant that the assessee was not maintaining the Daily Stock Register. We, however, find no such finding in the assessment order. On the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look into the accounts more carefully and to look for some material which could lead to the conclusion that the accounts maintained by the assessee were not correct. But, a low rate of gross profit, in the absence of any material pointing towards falsehood of the accounts books, cannot by itself be a ground to reject the account books under Section 145(3) of the Act. 11. In any case, the question whether fall in gross profit stood explained by the assessee or not was a question of fact. Both, ITAT and CIT(A) having accepted the explanation given by the assessee and the finding of fact recorded by them having not been shown to be perverse in any manner, no substantial question of law arises for our consideration in this case. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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