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TMI Blog2016 (10) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the fall in GP rate and non-maintenance of stock register, were not material even when the facts and circumstances, as detailed by the A.O., justified the invoking of provisions of Section 145(3). (iii) The CIT(A) has passed a perverse order in overlooking the fact that the A.O. had estimated the G.P. rate on the basis of the past performance in case of the assessee itself. (iv) The CIT(A) pas passed a perverse order in holding that in facts and circumstances of the assessee, the ratio of the decision reported in 326 ITR 223, 64 ITD 460 and 256 ITR 243, was applicable. (v) The CIT(A) has erred in not considering the application of the ratio of the decisions, reported in 38 ITR 579 and of the Hon'ble Supreme Court in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material, work in progress and finished goods as the assessee business is as such that it is not possible to maintain stock register on the basis of quantity and quality. It is also submitted that hundreds and thousands types of products are manufactured by the assessee with different sizes, length, width and dimension. Most of the process is done manually which passes through various phases, but all the complete records of purchases, sales and expenses had been maintained by the assessee. The ld Assessing Officer further considered the auditor's remark in 3CD form that the assessee had not maintained day to day quantitative stock register. The assessee's reply vide letter dated 24/12/2010 has been reproduced by the Assessing Officer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp sum addition of Rs. 5.00 lacs was confirmed by observing that it is settled law that fall in GP and non-maintenance of stock register alone cannot be a valid reason for invoking the provisions of Section 145(3) of the Act, for which he relied on the decision of Hon'ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath 306 ITR 120 wherein it has been held that quantum value of purchases and sales were not disputed, the inventory of closing stock was also not found to be incorrect, then non maintenance of sale stock register looses significance, so far as determination of GP is concerned. Therefore, neither the rejection of books of account nor the estimation of GP on the higher side was held justified. He further relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and valued property and disclosed in the P&L account and balance sheet. He further argued that whatever defects pointed out by the Assessing Officer are not sufficient to justify the rejection of books of account U/s 145(3) of the Act. The ld Assessing Officer made the addition on the ground that in preceding year, the GP was higher than the GP disclosed during the year under consideration but in the business line, the number of internal and external factors affect the performance of the business. Some of them are beyond the control of the assessee. The market competitive, there is recession in other countries, which affects the assessee, demand and supply and also price. The ld Assessing Officer applied 33% GP without pointed out any spec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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