Commissioner of Income Tax, Jaipur-III, Jaipur vs M/S Relaxe Rubber Products Neem Ka Thana, Sikar

Hon. Trivedi, J.—The present appeal has been filed by the Revenue u/s 260A of the Income Tax Act (hereinafter referred to as the said ''Act'') against the order dated 31.10.2008, passed by the Income Tax Appellate Tribunal, Jaipur Bench ''A'' Jaipur (hereinafter referred to as the ''Tribunal) in ITA No. 305/JP/2008 and C.O. No. 26/JP/2008.

The facts giving rise to the present appeal are that the respondent Assessee firm was engaged in the business of manufacturing and trading of Hawai Chappals, Canvas shoes etc. The said firm was assessed for the Asstt. Year 2004-05 by the Assessing Authority, who vide order dated 28.9.2006 rejected the books of accounts of the Assessee and made a trading addition of Rs. 14,91,017 and of Rs. 3,86,552/- in respect of Delhi Branch office. Assessing Officer also disallowed Rs.11,27,898/-, out of the sales commission/discount and also disallowed certain other expenses on lump sum basis. Being aggrieved by the said order, the respondent had preferred an appeal before the Commissioner of Income Tax(Appeals)-III, Jaipur, who vide the order dated 26.11.2007 partly allowed the said appeal. The Revenue therefore, preferred the ITA being No. 305/JP/2008 and the respondent assessee filed cross- objections against the said order passed by the CIT(A) before the Tribunal. The Tribunal vide order dated 31.10.2008, dismissed the appeal of the Revenue and partly allowed the cross-objection of the respondent assessee. The Department, therefore, has preferred the present appeal before this Court u/s 260A of the said Act.

It has been submitted by learned counsel Mr. Sameer Jain for the appellant that CIT(A) as well as the Tribunal had materially erred in law in not confirming the order passed by the Assessing Officer invoking the provisions contained in Section 145(3) of the said Act, more particularly, when the books of accounts of the assessee were found to be defective. Pressing into service the provisions of Section 145(3) of the said Act, the learned counsel submitted that where the assessing officer was not satisfied about the correctness of the accounts of the assessee, the Assessing Officer was required to make an assessment in the manner provided in Section 144 and that in the instant case the Assessing Officer having invoked Section 145(3) of the said Act, on he having not been satisfied with the correctness of the books of accounts of the assessee, the CIT(Appeals) and the Tribunal ought to have confirmed the said order of A.O. He also submitted that the Tribunal had also erred in law in allowing the deduction on personal uses of various assets claimed by the respondent in its books of accounts.

Having considered the submissions made by the learned counsel for the appellant and the provisions contained in Section 145, more particularly Section 145(3) of the said Act, this Court is of the opinion that there is no question of law, much less substantial question of law involved in the instant case.

It is pertinent to note that the CIT(A) while setting aside the order of A.O. had held interalia that the turn over of the assessee had increased to over Rs. 23.10 crores in comparison to the turnover of Rs. 19.67 crores in the previous year and that the g.p. rate of 14.99% of the relevant assessment year was better than the g.p. rate of 14.93% in the previous year. It was also found by the CIT(A) that the A.O. had not brought any material or evidence on record to indicate any instance of undisclosed purchases/sales or expenses by the assessee. The CIT(A) had also found that the defects pointed out by A.O. were due to the incorrect appreciation of the evidence and that the A.O. was not justified in rejecting the books of accounts of the assessee. The Tribunal also while confirming the order of CIT(A) had held as under:-

Even there is no any instance of any undisclosed purchase/sales/expenses mentioned in the assessment order.Besides above, it was also contended that the assessee has shown better turnover and gross profit, hence there was no reason for the AO to ignore the same. Considering these material aspect of the case, we are of the view that even if it is accepted for the moment that there was defect in the books of account as the AO tried to, it is well established position of law that past result of assessee is the best guide to estimate the income. Undisputedly, the assessee had shown better turnover and better g.p. rate during the year in comparison to immediately preceding year as discussed above. The assessee has also met out the defects pointed out by the A.O. Considering all these facts and circumstances of the case especially the past result, we are of the view that the ld. CIT(A) has rightly deleted the trading addition and the addition made in the income of Branch Office against the declared loss.

The CIT(A) and the Tribunal having considered the issues raised by the department in detail and not found substance therein, this Court is not inclined to interfere with the concurrent finding of facts recorded by the said two authorities. Even otherwise there being no substantial question of law involved, the present appeal being devoid of merits deserves to be dismissed and is accordingly, dismissed.