VIVEK VARMA,J. - (1.) The present appeal has been filed by the assessee under Section 260-A of the Income Tax Act. 1961 (hereinafter referred to as 'the Act') against the order of the Income Tax Appellate Tribunal, Allahabad Bench dated 16.3.2009 for the Assessment Year 2004-05, by which Tribunal dismissed assessee's appeal and confirmed the order dated 4.9.2006 passed by Commissioner of Income Tax (Appeals) Varanasi.
(2.) The Commissioner of Income Tax (Appeals), Varanasi, by order dated 4.09.2006 enhanced the addition by estimating the gross profit at 23.01 % and accordingly sustained the addition of Rs. 1,32,02,572/- which includes the addition made by Assessing Officer vide order dated 13.02.2006.
(3.) The instant appeal was admitted on the following questions of law: 1. Whether, the Income Tax Appellate Tribunal was legally justified in upholding the application of Section 145(3) of the Income Tax Act, 1961, upholding the rejection of books of account, and application of hypothecated G.P. Rate of 23.01 % as enhanced by the Commissioner of Income Tax (Appeals) 2. Whether the Income Tax Appellate Tribunal as well as learned Commissioner of Income Tax (Appeal) were legally justified in giving their new reasoning for justifying the application of Section 145(3) of the Income Tax Act, 1961 for upholding the rejection of books of account, contrary to the findings and conclusions mentioned by the assessing authority in paras 4.1, 4.II, 4.III, 4.IV and 4.V of the assessment order wherein the assessing authority has recorded positive findings in favour of the appellant for fall of GP rate in the current year, even though applying hypothetical GP rate at 15 % 3. Whether, the Income Tax Appellate Tribunal was legally justified in upholding the order of lower authorities and addition of Rs. 1,32,02,742/- towards trading profit merely on the basis of surmises and conjectures, ignoring the cogent material on record such as comparative chart, fall in rupee value, etc. and even though no defects were pointed out in the books of account and other records maintained by the appellant and produced before the assessing authority 4. Whether, the fall in GP rate as declared by the appellant at 14.52% being comparable to the rate in the industry, the addition of trading profits of RS. 1,32,02,742 for the year under consideration is legally sustainable;