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TMI Blog2013 (12) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... of inputs with there being no corresponding rise in the price of sale - There is no significant increase in the expenses viz. personnel cost, administrative & selling expenses, interest & finance charges, etc. considering the increase in turnover reported from year to year - The increase in output costs is almost insignificant compared to the increase in input costs - The steep decline in the rate of net profit, the assessee cannot, therefore, attribute to the increase in input costs - The estimation of profit by the AO is reasonable - The order of rejection is not required to be expressed - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the books of account produced by the assessee at the time of assessment, and thereafter estimated net profit and assessed the income of the assessee. Being aggrieved by this order of the Assessing Officer, an appeal was taken to the Commissioner of Income Tax (Appeals), who found that the rejection of books of account of the assessee by the Assessing Officer was not justified under law and he found that this rejection was based on surmises and conjectures. Therefore, the Commissioner of Income Tax (Appeals) revised the order of the Assessing Officer and passed suitable orders. The Revenue, on being dissatisfied with the judgment and order of the Commissioner of Income Tax (Appeals), approached the Tribunal. The Tribunal reversed the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer, who has ignored and did not take into consideration. In support of his submissions, he relied on a judgment of Delhi High Court in C.I.T. v. Poonam Rani[1] and a judgment of the Supreme Court in Sanjeev Woollen Mills v. C.I.T.[2] After considering the submissions of learned counsel for the appellant, it appears that the following two points are material to decide whether this appeal should be admitted or not? i. Whether any implied rejection is permissible under Section 145 of the Income Tax Act, or not? ii. Whether, in this case, the learned Tribunal as well as the Assessing Officer have rejected the books of account without having any material whatsoever? Before we discuss these two points, we set out Section 145 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such express satisfaction is required. Therefore, we quote the relevant portion of the order of the Assessing Officer, which has been upheld by the Tribunal. "It is abundantly clear from the above that though there is marginal fall in GP ratio, the net profit has been shown at an abysmal low rate of 0.76% compared to that shown in the earlier years, i.e., assessment year 2005-06 at 3.04% and assessment year 2006-07 at 4.32%. Even if the assessee's claim of increase in the raw material cost is accepted (manufacturing & trading expenses), the assessee has not brought out any evidence on record to show that there is no corresponding increase in the sale price. The accepted and/or cardinal principle of trade is whenever there is an increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined threadbare the probabilities of the entries of the accounts. He has given reasons why he does not accept, and we repeat that the order of rejection is not required to be expressed. Nowhere in Section 145 of the Act, it has been said that there should be express order of rejection. Upon reading of the entire findings and approach, if the mind of the Assessing Officer can be found that his mind is to reject the books of account, no express word is required to such rejection. The Assessing Officer has found that no material evidence was produced before him. It is unfortunate that the learned Commissioner of Income Tax (Appeals) has ignored the findings absolutely. The learned Tribunal has, in our view, correctly, on fact, upheld the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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