D.K. Seth, J. - (1.) In this appeal the question to be answered is as follows : "Whether the Tribunal was justified in law in holding that the GP of the appellant for the asst. yrs. 1990-91 and 1991-92 should be calculated at the GP of the asst. yr. 1989-90 at 18.71 per cent and whether the purported findings of the Tribunal in this behalf are based on any material and/or have been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant and/or extraneous materials and/or are otherwise arbitrary, unreasonable and perverse ?" The facts :
(2.) In this case the assessment years involved are 1990-91 and 1991-92. The AO had found so far as the year 1990-91 is concerned that no stock register or production register was maintained by the assessee. Item-wise quantity of goods produced, the opening stock, the closing stock, the purchases and the sales were not verifiable. The stocks are sold at different rates revealing that the same stock was sold at a lower rate and also at a higher rate and that the assessee was unable to explain the item-wise production of different kinds of bricks and failed to explain the fall in average sale figure compared to the last year and the revised Tax Audit Report was also silent about the yield of finished products by commenting 'not ascertained' and the AO ultimately came to the conclusion that it was clear that the assessee had failed to establish the correctness of the income deduced on the basis of the accounts maintained by the assessee. The CIT(A) reversed the order. The learned Tribunal affirmed the order. It is against this order the present appeal has been filed. Similar is the case in respect of the asst. yr. 1991-92, though, however, the facts are little different with which we will deal at appropriate stage.
(3.) Mr. J.P. Khaitan, senior counsel, assisted by Mr. Sanjay Bhowmick appearing on behalf of the appellant, submits that the rejection of the books of account was not justified having regard to the proviso to Section 145 as it stood prior to its amendment applicable to the relevant assessment year. The absence of stock register itself would not justify the rejection of the books of account unless coupled with certain other factors. According to him, there were materials from which even without the stock register the accounts could be verified. He also points out that there was no finding to the extent that the accounts were not correct and complete or that the AO was of the opinion that the income could not be deduced from the accounts maintained by the assessee. In the absence of such conclusion, the books of account could not be rejected. To support his contention, he relied on Pandit Bros. v. CIT, S. Veeriah Reddiar v. CIT, P. Venkanna v. CIT, R.V.S. & Sons Dairy Farm v. CIT, and Omar Salay Mohamed Sait v. CIT. He also relied on S.N. Namasivayam Chettiar v. CIT, cited by Mr. Agarwal to support his contention. (1) The next contention that was raised alternatively by Mr. Khaitan was, that assuming but not admitting that the books of account were rightly rejected, in that event, in order to arrive at the income, the Tribunal could not have proceeded simply on the basis of the figures of earlier sales related to earlier years ignoring the other materials placed before it on the basis of which the income could not be presumed to be shown less, particularly when the learned Tribunal had accepted that the price had gone down and the price of raw materials had gone upward. On this ground, he prays that the order of the learned Tribunal be set aside. (2) He also points out that so far as the asst. yr. 1991-92 is concerned, there was stock register. But on the ground that it has not been maintained item-wise, therefore, the accounts were rejected. However, even in the assessment order or the order of the learned Tribunal, there was no opinion expressed that the method applied was such that from the accounts maintained the income could not be deduced though the accounts were not found to be incorrect or incomplete. Therefore, according to him, the books of account could not at all be rejectd. ;