Law: Income Tax Act, 1961

Section: 145

Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (GP rate) - Assessment year 2010-11 - Assessee declared an income of Rs. 3.15 lakhs and applied a gross profit rate of 3.57 per cent - However, Assessing Officer applied a gross profit rate of 10 per cent and, consequently, added Rs 39.54 lakhs - Commissioner (Appeals) partially accepted assessee's contentions and granted relief to extent that gross profit rate was applied in preceding year and confirmed addition of Rs 21.21 lakhs, which was further confirmed by Tribunal - Assessee contended that Assessing Officer and other authorities fell into error in not taking into consideration fact that quantitative tally of ingredients and raw material was available in records - Commissioner (Appeals) on basis of gross profit rate applied in preceding year granted relief to assessee this order was upheld by Tribunal - Whether since Commissioner (Appeals) as well as Tribunal did not look available records, matter was to be remanded back for fresh examination of books of amount - Held, yes [Para 9] [In favour of assessee/Matter remanded] JUDGMENT 1. Issue notice. 2. Mr. Rohit Madan, advocate accepts notice on behalf of the Revenue. 3. With the consent of the parties, matter is finally heard. 4. The question of law urged in this appeal is : "Whether the Income-tax Appellate Tribunal and the lower authorities fell into error in rejecting the appellant-assessee's accounts on the footing that quantitative tally of the ingredients and raw materials were not maintained and proceeded to arrive at an improper gross profit rate as well as the turnover figures ?" 5. The assessee carries on his business in preparation and trading of hing. The assessee filed its return for the assessment year (AY) 2010-11 and declared an income of Rs. 3,15,210. In the scrutiny the Assessing Officer (AO) rejected the turnover figures and the gross profit rate of 3.57 per cent. of the total sale and instead directed that the gross profit rate of 10 per cent. be applied, against the total turnover of Rs. 6,14,84,607. The Assessing Officer consequently added Rs. 39,54,014. The Commissioner of Income-tax (Appeals)…

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