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TMI Blog2022 (6) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, by raising the following substantial question of law: "Whether under the facts and circumstances of the case the Income Tax Appellate Tribunal was right in upholding the order of the commissioner of income tax (appeals) sustaining the addition to the extent of Rs.1,32,85,764/-, merely by relying on the rate of gross profit earned in the earlier year?" 2.The appellant/assessee is engaged in the business of manufacturing mild steel ingots. For the assessment year 2014-15, they filed its return on 29.11.2014 declaring the total income of Rs.14,21,370/-. Subsequently, the case was taken up for scrutiny and during the course of assessment proceedings, the appellant was called upon to file necessary documents in support of purchase expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported by necessary bills and vouchers and the same were audited by an Accountant as required under section 44AB of the Income Tax Act; and as per the report of the auditor, there is no adverse comment on books of accounts as well as supporting evidence for various expenses including purchases debited into profit and loss account. Further, the relevant records for the assessment year in question were washed away in 2005 flood and hence, the appellant/ assessee could not gather all the information relating to purchase details. However, the assessing officer as well as the CIT(A) made adhoc additions, without bringing on record any evidence to prove that the appellant / assessee has inflated purchases. Therefore, the learned counsel sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted below for ready reference: Commissioner of Income Tax (Appeals): "....For want of the books of accounts or other details in support of the income returned, the Assessing Officer was not able to verify the correctness of the income. The assessment was taken up for scrutiny only because the profit was very less when compared to the turnover. The profit before tax Rs.16,71,741/- on the turnover of Rs.53.14 cr. The net profit ratio works out to 0.30% which is very low. Even as per the appellant, the gross profit rate has come down to 23.27% against 25.77% shown in the earlier year. In the absence of any details furnished by the AO, the assessing officer was handicapped with determining the correct income of the appellant. Considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d pleading of the assessee that the auditor has given clean chit to the books of accounts maintained by the assessee and has not made any adverse comments on purchases debited into P&L account. Under these circumstances, we are unable to subscribe to the reasons given by the AO to make adhoc disallowance on purchases. The Ld CIT(A), after considering relevant facts and also taken note of fact that there is a decline in gross profit declared by the assessee for the impugned assessment year compared to earlier financial year, has directed the AO to restrict the disallowance on purchases to the extent of 2.5%, fall in rate of gross profit on total turnover for the year. The said findings recorded by the Ld. CIT(A) appears to be logical and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the evidence adduced before the same. Such well considered findings of the appellate authorities do not warrant any interference at the hands of this court. 10.At this juncture, it is pertinent to refer to the decision of Delhi High Court in Alpasso Industries Pvt. Ltd. v. Income Tax Officer [(2019) 410 ITR 0212 (Delhi)], in which, it was observed as follows: "8. A decision of question of fact depends upon appreciation of evidence and material placed before the authorities, i.e. the Tribunal. The Tribunal, as a final fact finding authority, has to determine and decide question of fact in dispute by examination of evidence and material produced. Inference and conclusion based upon appreciation of fact does not give rise to a question o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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