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TMI Blog2011 (1) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... hese appeals pertain to same assessment year in respect of same assessee. Even the question of law raised is identical. It so happened that two appeals, one preferred by the Revenue and the other by the assessee, were decided by the Tribunal on different occasions by passing two orders and that is the reason that two appeals are before us. ITA 660/2004 was admitted on 8-11-2004. Since decision in the second appeal was rendered subsequently by the Tribunal, the appellant filed ITA 730/2008 which was admitted on 26-10-2010. Identical question of law was framed while admitting the two appeals. This question of law is as under : "Whether the Tribunal is justified in not making any addition on account of trading result in spite of rejecting books of account and recording specific findings that in the pre-survey period trading results were in the negative and assessee had no explanation for the same." 2. The aforesaid question has cropped up for consideration in the following factual backdrop. In the premises of the respondent assessee, which is in the business of sale of automobile accessories, a survey was conducted by the Income-tax department on 7-1-2000. Certain discrepancies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the view that the assessee was entitled to telescope the amount already surrendered during survey. 5. The matter was carried out further by the assessee before the Income-tax Appellate Tribunal. As mentioned above the assessee filed appeal against that part of the order of CIT(A) whereby CIT(A) had rejected books of account and affirmed the GP rate of 13 per cent. On the other hand, the department also filed the appeal whereby deletion of Rs. 20 lakhs was made by the CIT(A) in the manner indicated above. Appeal of the assessee came up for consideration first and has been decided by the Tribunal vide orders dated 16-4-2004. Since in the second appeal which was preferred by the Tribunal this order is followed, it would be safe to refer to the decision rendered by the Tribunal vide order dated 16-4-2004. 6. The Tribunal after detailed discussion upheld the order of CIT(A) insofar as it pertains to the rejection of the books of account of the assessee. Since account books of the assessee were rejected, it became necessary to examine the orders of the authorities before fixing the GP rate. The Tribunal dealt with the issue as to whether the GP rate of 13 per cent adopted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discrepancy in the stocks inasmuch as on actual physical verification stock was in excess of Rs. 15 lakhs of what was reflected in the books of account. There was even a discrepancy regarding the cash. Because of this reason the GP declared by the assessee in the previous years was not the safe basis for arriving at the GP rate of year in question as it cannot be presumed that in last five years, proper books were maintained. She further tried to demonstrate, on the basis of post survey period GP declared by the assessee himself, that the GP rate should have been much more and this aspect was totally glossed over by the Tribunal. Dilating on this aspect she pointed out that as far as post survey period is concerned the assessee had himself shown sales of Rs. 1.66 crores and GP of Rs. 10.85 lakhs thereupon. She further pointed out that the assessee was in the business of sale of truck accessories earlier and during this year, as per the assessee himself, the business was switched over to the sale of car accessories. Referring to the order passed by the Assessing Officer she pointed out that when the sale of car accessories during this period and the profitability thereupon is reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring the GP rate of 4.59 per cent to 5.39 per cent which was duly accepted by the department. On this basis, his submission was that the GP rate of 13 per cent arrived at by the Assessing Officer or the CIT(A) was totally out of tune whether it be compared with the past history of the returns filed by the assessee or the subsequent. 10. The aforesaid factual information would clearly demonstrate that insofar as books of account of the assessee are concerned these have been rejected by all the authorities below and this issue has attained finality. Furthermore, the CIT(A) as well as the Tribunal has allowed telescoping of Rs. 20 lakhs surrendered by the assessee at the time of survey and this cannot be questioned by the Department as this aspect was rejected at the time of appeal and no question of law has been framed. The entire dispute, in these circumstances, revolves around the GP rate that has been arrived at by the learned Tribunal. 11. After analyzing the peculiar facts of this case as well as the material on record, we intend to take the view that neither the Department nor the assessee is wholly correct. It would also follow that the approach of the Tribunal is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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