M/S Shree Ganpati Embroidery Private Limited v. The Commissioner Of Income Tax Ii, Amritsar

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITA No.510 of 2008Date of decision: 10.11.2008 M/s Shree Ganpati Embroidery Private Limited Vs. The Commissioner of Income Tax II, Amritsar. -----Appellant -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR JUSTICE L.N.MITTAL Present:None for the appellant.Ms.Naveender P.K.Singh, Sr.Standing Counsel for the Revenue. Adarsh Kumar Goel, J 1.The assessee has preferred this appeal under Section260-A of the Income Tax Act, 1961 (in short, ‘the Act’) againstthe order of the Income Tax Appellate Tribunal, Amritsar Bench,Amritsar, dated 12.10.2007 in ITA No.34 (ASR) 2007, for theassessment year 2003-04, proposing to raise following substantialquestions of law:- “i) Whether in the facts and circumstances of thecase, the Tribunal is justified in upholding the rejection of books of account as done by theAssessing Officer particularly when the AO had notrecorded any satisfaction about the correctness andcompleteness of the books of account? ii) Whether the books of account can be rejectedunder section 145(3) without recording anysatisfaction with regard to its correctness andcompleteness? iii) Whether in the facts and circumstances of thecase, the Tribunal is justified in estimating the saleof the appellant company at Rs.6,00,00,000/- againstdeclared sales of Rs.5,58,80,907/- without givingany reason or finding in this regard? iv) Whether in view of the facts and circumstancesof the case, the Tribunal is justified in estimating theGP rate @ 32% as against declared GP rate of24.95%? v) Whether the books of account can be rejectedmerely because there was a surrender during theSurvey proceedings? vi) Whether the books of account can be rejectedwhile framing the assessment under section 143(3) without recording any satisfaction regarding thecorrectness and completeness of the books?” 2.On a survey being conducted under section 133-A ofthe Act, the Survey team prepared inventories of stocks at thepremises of the assessee and found that only a part of the stockwas entered in the books of account. The assessee surrenderedincome of Rs.60,00,000/- by way of excess stock. During theassessment, the Assessing Officer held that complete stock wasnot reflected from the books of account and made best judgmentassessment. The CIT(Appeals) upheld the plea of the assessee thatthe excess stock was accounted for during the survey andthereafter, addition on account of GP rate by estimating the turn-over was not called for. The ITAT upheld the view of theAssessing Officer regarding the rejection of books of account andapplied GP rate of 32% as against 35% applied by the AssessingOfficer. 3.The substantial questions of law framed by theassessee, in effect, relate to the findings recorded afterappreciation of evidence. 4.A perusal of the order of the Assessing Officer showsthat explanation of the assessee about books of account havingbeen regularly maintained was rejected by giving detailedreasons. The Tribunal also upheld the finding that the assesseewas having sale and purchase outside the books of account andthe estimate of sales based on best judgment was upheld. TheTribunal has considered all the points raised by the assessee andalso referred to its earlier order upholding the rejection of booksof account. The Tribunal also held that the CIT (A) overlookedthe reasons given by the Assessing Officer for rejecting the bookresults. It is not a case where books of account are properlymaintained and the Assessing Officer has substituted his ownestimate ignoring the books of account, without giving anyreasons. There is no patent error in the view taken by the Tribunalthat books of account of the assessee could not be accepted as thesame did not reflect true income. 5.Once there was valid basis for rejecting the accountsand assessment was not capricious or vindictive, the estimate hadrational, some amount of guess work had to be allowed and couldnot be interfered with, merely because a different view could betaken. 6.In view of above, it cannot be held that any substantial question of law arises. 7.The appeal is dismissed. (Adarsh Kumar Goel)Judge November 10, 2008 ‘gs’ ( L.N.Mittal)Judge