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TMI Blog2016 (7) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial question of law: "Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was correct in arriving at the conclusion that the Assessing Officer has no sufficient material to reject the books of account by invoking section 145 of the I. T. Act and deleting the addition though the Assessing Officer has elaborately brought on record the defects noticed during the course of assessment proceedings and work in progress valued by the Assessing Officer has been found correct?" 2. The case of the assessee was picked up for scrutiny assessment and the assessment came to be framed under section 143(3) of the Act by an order dated 31.12.2007 whereby, the Assessing Officer made disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court was invited to the findings recorded by the Assessing Officer, to point out that the Assessing Officer had noted as many as eight discrepancies in the books of account maintained by the assessee for the purpose of coming to the conclusion that the books are not reliable. It was submitted that in these circumstances, the Tribunal was not justified in holding that the books of account had been wrongly rejected. The learned counsel further reiterated the grounds of appeal stated in the memorandum of appeal as well as the grounds canvassed before the Tribunal. Reliance was placed upon the decision of the Supreme Court in the case of Kachwala Gems, Jaipur v. Joint Commissioner of Income Tax, Jaipur, 2007 (288) ITR 10, wherein it has been h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliable. The Commissioner (Appeals) examined each discrepancy pointed out by the Assessing Officer and after giving detailed reasons in respect thereof, found that none of the eight grounds taken by the Assessing Officer for rejecting the books of account are valid and held thus: "The fall in the G.P. rate has been fully explained by the appellant as under: 1 Decrease in manufacturing cost Rs.(+) 329472859 2 Increase in raw material cost Rs.(-) 416127256 3 Fall in sales realization Rs.(-) 472525614 Net effect on Gross Profit Rs.(-) 559180011 Effect on Gross Profit (in %) 8.90% The Assessing Officer has not even once doubted or made any adverse remarks with reference to the yield of yarn/grey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a finding that the AO was not correct for rejecting the books of accounts as the grounds for rejection of books of accounts were found to be inconsistent. It is a settled position of law that the AO is expected to make assessment on the basis of the material available on record and basis should be tenable in the eyes of law. In the present case, the AO after rejecting the books of accounts estimated the profit. It was incumbent upon the AO when he rejected the books of accounts, he had to make the assessment in the manner prescribed under section 144 of the Act. As per this provision, the AO after taking into account all relevant material which he had gathered and was required to give the assessee an opportunity of being heard before maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale price. As per AO, there is increase in turnover, therefore the gross profit ought to have been increased instead of decreasing. We are of the view that such reasoning cannot be universally applied and becomes fallacious in certain conditions. In the case in hand, the assessee is a company subjected to internal audit as well as statutory audit. The auditors have not pointed out any defect and/or there is no adverse remarks. The AO has not made any adverse comment upon sale & purchase. Undisputedly, no defect has been noticed by the Central Excise Department in the registers maintained under the Central Excise Act, regarding raw material and finished goods, which is subjected to inspection and audit. In our considered view, the rejectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account of the assessee. Essentially therefore, the impugned order is based upon concurrent findings of fact recorded by the Tribunal after appreciating the material on record. The learned counsel for the appellant is not in a position to dislodge the findings of fact recorded by the Tribunal by pointing out any material to the contrary, nor is it the case of the revenue that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. Under the circumstances, in the absence of any perversity being pointed out in the findings of fact recorded by the Tribunal after appreciating the material on record, the conclusion arrived at by the Tribunal being based upon findings of fact, does not gi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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