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TMI Blog2022 (1) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the Assessee s gross profit rate for the AY in question appears to be based on surmises and conjectures, triggered as it were by the ITAT s rejection of the Assessee s books of account under Section 145 of the Act. Mr. Ray for the Assessee is right in contending that with the assessment having been completed under Section 143 (3) of the IT Act, and after the Assessee had produced its books of account, the question of invoking Section 145 of the IT Act did not arise. Court is satisfied that in rejecting the Assessee s book of account u/s 145 of the IT Act, the ITAT committed a serious error. It proceeded on that basis to re-work the gross profit margin. Question of law framed by this Court by order dated 10th July, 2017 is answere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the closing stock since, as noted in the assessment order, while the cash book, ledger, purchase, sale, vouchers and cash memos were produced only the stock register was not produced. 3. It is then stated in the assessment order in fact, the stock register was not produced on 8th October, 2007 when a proceeding under Section 133A of the Act was undertaken in the business premises of the assessee. Clearly, this event of the survey on 8th October, 2007 was subsequent to the period of the AY. 4. Again in the concluding portion of the assessment order, the AO stated that during the course of proceeding under Section 133A of the Income Tax Act, 1961 in the business premises of the assessee on 8th October, 2007 (AY 2008-09), it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 306 (Cal.). The next question, therefore, that arises under the circumstances is the reasonability of estimation of its gross profit by sustaining an addition of ₹ 4 lakhs, i.e. ₹ 15.68 lakhs; the Revenue being not in appeal against the impugned order. During the hearing, the learned AR was specifically questioned by the Bench in this regard, as the assessee s gross profit rate, after the said addition, works to 1.38%, even as the A.O. has observed two examples (in same trade) wherein gross profit of around 2.1% stands disclosed, as mentioned at page 2 and para 3.6 of the assessment and appellate orders, respectively. We, therefore, see no reason for interference with the order of the ld. CIT (A), even as indicated at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot arise. 10. The Court is satisfied that in rejecting the Assessee s book of account under Section 145 of the IT Act, the ITAT committed a serious error. It proceeded on that basis to re-work the gross profit margin. 11. For all of the aforementioned reasons, the question of law framed by this Court by order dated 10th July, 2017 is answered in the affirmative, i.e., in favour of the Assessee against the Revenue by holding that the ITAT erred in affirming the conclusions of the AO and CIT(A) based on materials collected during the period subsequent to the assessment period since each assessment year is separate. The corresponding orders of the AO and the CIT (A) to the above extent, are also set aside. 12. The appeal is allowed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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