9911796707
TMI Blog2014 (2) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... MADRAS HIGH COURT] - the system of accounting adopted by an assessee could not be rejected - the assessee did not maintain all through the year a separate variety-wise stock account either on the basis of counts of yarn, or prices or classes of goods - the absence of such stock books did not prevent the acceptance of the book results in the previous assessment years - no attempt was made to verify the particulars given by the assessee by way of statements and the only ground on which the book results were rejected was that the gross profits were low – thus, the Department had not proved the case by any substantive materials – Decided in favour of Assessee. - Tax Case (Appeal) Nos.345 & 346 of 2007 - - - Dated:- 7-1-2014 - Chitra Venkatar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invisible loss of 2.63% as against 2.2% subsequent year 1995-96. Based on the above said three facts, the Officer held that fall in G.P. rate was not explained properly. Thus, taking the G.P. rate available for the year 1993-94 at 3.08%, the income of the assessee was worked out. 3. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals), who accepted the explanation of the assessee and thereby allowed the appeal. The Commissioner of Income Tax (Appeals) pointed out that the contention of the Assessing Officer was too general in nature. In the circumstances the appeal was allowed. 4. Aggrieved by this, the Revenue went on appeal before the Income Tax Appellate Tribunal. Taking the view that the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to draw inference that the gross profit adopted by the assessee was not reliable. 6. Countering the stand of the assessee, learned Standing counsel for the Revenue pointed out that the burden is on the assessee to prove the manner in which they carried profit at 2.99%, compared to 3.08%. Since there was no materials placed before the Assessing Officer to explain such a fall, rightly the Income Tax Appellate Tribunal had accepted the Revenue's case to allow the appeal and thereby confirmed the order of the Assessing Officer. 7. We have heard the learned Counsel appearing on either side and perused the materials available on record. 8. As already pointed out in the preceding paragraphs, the assessee had sold cotton at the average price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of rejecting the book results, particularly, when the specific case of the assessee was that there was an increase in the price of kappas, without corresponding increase in the price of cotton, the Assessing Officer made no enquiry to test the assessee's contention. In the background of the facts, which are germane in considering the assessee's case for gross profit, the First Appellate Authority rightly came to the conclusion that the allegation made by the Assessing Officer for rejecting the books were too general in nature. He pointed out that the Assessing Officer had not stated that the purchases had not been made nor had rejected the accounts; thus, the Commissioner of Income Tax (Appeals) agreed with the assessee and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of counts of yarn, or prices or classes of goods; the absence of such stock books did not prevent the acceptance of the book results in the previous assessment years. This Court further observed that no attempt was made to verify the particulars given by the assessee by way of statements and the only ground on which the book results were rejected was that the gross profits were low. Thus, holding the view that this by itself would not be enough to condemn the system of books of accounts, this Court agreed with the assessee that mere low gross profits would not by itself the loss. 11. When we test the decision to the facts of the case herein, it is seen that the Assessing Officer does not reject the books of accounts either on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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