The Commissioner Of Income Tax-14 v. Shri. Jaichand Madanlal Jain

ASN IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2757 OF 2010 The Commissioner of Income Tax-14.Vs.Shri. Jaichand Madanlal Jain. ..Appellant. ..Respopndent. Mr.D.K.Kamwal for theAppellant.Mr.Sameer Dalal for the Respondent. CORAM : S.J.VAZIFDAR & M.S. SANKLECHA, JJ. DATE : 31st July, 2012 PC: This appeal by the revenue under Section 260A of the Income Tax Act, 1961(the Act) is filed against the order dated 6/8/2009 of the Income Tax Appellate Tribunal (ITAT) relating to the assessment year 2003-04. The appellant revenue has reformulated the question of law for consideration of this court as under. Whether on the facts and in the circumstances of the case, the ITAT was justified to delete the addition on account of gross profit in the year under consideration ignoring its own finding that books of account of assessee were not reliable and deserved to be rejected u/s/.145(3). In light of above ITAT ought not to have relied upon gross profit result of preceding year as res-judicata does not apply to Income Tax proceeding for each assessment year is a separate assessable entity? 2)The respondent-assessee carries on business of manufacturing and selling of shirtings. Consequent to survey under Section 133A of the Income Tax Act, 1961, the respondent filed return of income for assessment year 2003-04. During the course of assessment proceedings the Assessing Officer held by order dated 31/3/2006 that respondent was unable to prove the genuineness of the transactions recorded by it in its books. In the circumstances, the Assessing Officer concluded that the account did not properly reflect the profits earned by the respondent assessee and consequently enhanced the assessee's income by estimating 15% gross profit in his business by comparing his gross profit ratio with three other business entities in different line of business. This resulted in an addition of Rs.53.03 lacs to the income of the respondent. 3)In appeal, the Commissioner of Income Tax (Appeals) by an order dated 21/12/2006 allowed the respondent's appeal. The order dated 21/12/2006 held that three comparable cases relied upon in the assessment order to determine the gross profit of the respondent at 15% was unjustified as the three cases which were compared were not in the business identical to the respondent's business. Therefore, the addition of Rs.53.93 lacs was deleted. 4)In appeal, the Tribunal by its order dated 6/5/2003 held that 15% gross profit ratio applied to determine the respondent's income by comparison with three other units was not proper. This was for the reason that the three compared units were carrying on business in areas other than those where the respondent carried on business. The Tribunal upheld the finding of the Commissioner of Income Tax (Appeals) and held that gross profit declared by the respondent at 8.39% was reasonable and proper when the same is compared with the gross profit declared by the respondent-assessee for the preceding two years. Thus, the Tribunal upheld the deletion of Rs.53.93 lacs done by the Commissioner of Income Tax(Appeals). 5)We find that the issue under consideration is one of fact. There are concurrent findings of fact of both the Commissioner of Income Tax (Appeals) and the Tribunal holding that the ratio of gross profit applied by the respondent at 8.39 % is reasonable and proper. Further, this finding of fact is not alleged to be perverse or arbitrary. In the circumstances, no substantial question of law arises for consideration by this court. 6)The appeal is dismissed. No order as to costs. ( M.S. SANKLECHA, J. ) ( S. J. VAZIFDAR, J.)