Shri Venkteshwar Sugar Mills v. CIT

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The Tax PublishersI.T.A. No. 27 of 2002 2012 TaxPub(DT) 0948 (All-HC) : (2012) 341 ITR 0588 INCOME TAX ACT, 1961 --Accounting method--RejectionEstimation of GP rate--During scrutiny, AO found that during the assessment year under consideration, the G. P. rate was shown at 16.20 per cent, in comparison to the last year, where it was 33.44 per cent. Further, AO found that there were various discrepancies in the books of account such as no proper vouchers were maintained, no stock register for gunny bags, diesel consumption as well as consumable stores like sulphur, salt and lime, etc., were open for proper verification. AO rejected the books of account and estimated the sale and G. P. rate on the basis of the immediate previous year and applied the G. P. rate at 27 per cent. Assessee submitted that the production cost had increased about three times against the sale price, thus no addition could be made by AO pertaining to the GP rate without assigning any reason. CIT(A) and Tribunal confirmed the addition. *Held:* When the books of account were not properly maintained and the vouchers pertaining to the consumable items were not available for verification, then there was no option before AO except to estimate the sale and G.P. rate which he determined by taking the comparative figure of assessee for the previous assessment year. Since the application of GP rate on estimate basis was a question of fact, therefore, impugned order passed by Tribunal was sustained. Income Tax Act, 1961 Section 145(2) IN THE ALLAHABAD HIGH COURT UMA NATH SINGH & SATISH CHANDRA JJ. Venkteshwar Sugar Mills v. CIT I.T.A. No. 27 of 2002 12 January, 2012 S. M. K. Chaudhary for the Appellant by : S. C. Mishra for the respondent by : JUDGMENT *Dr. Satish Chandra J.* This appeal under section 260A of the Income Tax Act, 1961, has been filed against the order and judgment dated 17-1-2002, passed by the Income-tax Appellate Tribunal, Lucknow in ITA No. 450 (Alld.) of 1994. 2. On 17-3-2010, a Co-ordinate Bench of this court has admitted the present appeal on the following substantial questions of law : '1. Whether the Tribunal has committed substantial illegality by not considering the grounds raised by the appellant in terms of the objection filed before the assessing authority ? 2. Whether the Tribunal has committed substantial illegality by relying upon the material of assessment of the previous year though, no reliance could have been placed on the material of assessment of the previous year ?' SUBSCRIBE FOR FULL CONTENT

The Tax PublishersI.T.A. No. 27 of 2002
2012 TaxPub(DT) 0948 (All-HC) : (2012) 341 ITR 0588

INCOME TAX ACT, 1961

--Accounting method--RejectionEstimation of GP rate--During scrutiny, AO found that during the assessment year under consideration, the G. P. rate was shown at 16.20 per cent, in comparison to the last year, where it was 33.44 per cent. Further, AO found that there were various discrepancies in the books of account such as no proper vouchers were maintained, no stock register for gunny bags, diesel consumption as well as consumable stores like sulphur, salt and lime, etc., were open for proper verification. AO rejected the books of account and estimated the sale and G. P. rate on the basis of the immediate previous year and applied the G. P. rate at 27 per cent. Assessee submitted that the production cost had increased about three times against the sale price, thus no addition could be made by AO pertaining to the GP rate without assigning any reason. CIT(A) and Tribunal confirmed the addition. Held: When the books of account were not properly maintained and the vouchers pertaining to the consumable items were not available for verification, then there was no option before AO except to estimate the sale and G.P. rate which he determined by taking the comparative figure of assessee for the previous assessment year. Since the application of GP rate on estimate basis was a question of fact, therefore, impugned order passed by Tribunal was sustained.

Income Tax Act, 1961 Section 145(2)

IN THE ALLAHABAD HIGH COURT

UMA NATH SINGH & SATISH CHANDRA JJ.

Venkteshwar Sugar Mills v. CIT

I.T.A. No. 27 of 2002

12 January, 2012

S. M. K. Chaudhary for the Appellant by :

S. C. Mishra for the respondent by :

JUDGMENT

Dr. Satish Chandra J.

This appeal under section 260A of the Income Tax Act, 1961, has been filed against the order and judgment dated 17-1-2002, passed by the Income-tax Appellate Tribunal, Lucknow in ITA No. 450 (Alld.) of 1994.

2. On 17-3-2010, a Co-ordinate Bench of this court has admitted the present appeal on the following substantial questions of law :

'1. Whether the Tribunal has committed substantial illegality by not considering the grounds raised by the appellant in terms of the objection filed before the assessing authority ?

2. Whether the Tribunal has committed substantial illegality by relying upon the material of assessment of the previous year though, no reliance could have been placed on the material of assessment of the previous year ?'