- (1.) THIS appeal has been preferred by the assessee against the order passed by the Tribunal, Amritsar Bench, Amritsar in substantial questions of law : "(i) Whether in the facts and circumstances of the case, the Tribunal, Amritsar Bench, Amritsar was justified in assessing the additions made by the lower authorities by invoking the provisions of proviso to s. 145(1) of the IT Act, on the wrong assumption that the stock register was not produced by the assessee before the AO after working out day -today opening and closing stocks ? (ii) Whether in the facts and circumstances of the case, the learned Tribunal was right in law while rejecting the rectification application filed by the assessee under s. 254(2) in the IT Act vide Annex. A/6 ? (iii) Whether in the facts and circumstances of the case, the Tribunal, Amritsar Bench, Amritsar was justified in invoking the provisions to s. 145(1) of the IT Act against the assessee for applying a gross profit rate ? (iv) Whether in the facts and circumstances of the case, the Tribunal, Amritsar Bench, Amritsar was justified in relying upon the points against the assessee, which was decided by the CIT(A) in favour of the assessee and against which no appeal was carried out by the Revenue -
(2.) THE assessee filed his return for the asst. yr. 1990 -91. During the assessment, the AO noticed that day -to -day opening of stocks as well as closing stock had not been worked out; there was difference in the stock inventory figures as well as figures shown in the stock register; the assessee had sold certain items at rates lesser than the purchase price on same day.
(3.) THE AO, accordingly, proceeded to make estimate of sales at Rs. 35 lakhs as against sales shown at Rs. 33,89,397. The AO applied the GP rate of 8.5 per cent as against 6.99 per cent declared by the assessee, considering the GP rate declared by the assessee during previous years. The AO made certain additions. On appeal, the assessee has been given partial relief. Only contention raised by the learned counsel for the assessee is that invocation of proviso to s. 145(1) of the IT Act, 1961 (for short, 'the Act') by the AO was not justified, as method of accounting employed by the assessee has not been found to be wrong, which is the only ground for invoking the said proviso. Reliance was placed on judgment of the Rajasthan High Court in CIT vs. Thakurmal Bajranglal (1987) 66 CTR (Raj) 187 : (1988) 173 ITR 66 (Raj), wherein it was observed : "The contention of learned counsel for the Revenue is that the powers exercised by the ITO are under sub -s. (2) of s. 145 and not under the proviso to sub -s. (1) thereof. He argued that the Tribunal overlooked this aspect and, therefore, the conclusion reached by it is not justified. In other words, no attempt is made on behalf of the Revenue to rely on the proviso to sub -s. (1) of s. 145 of the Act, the only argument being based on the applicability of sub -s. (2) of s. 145. In such a situation, no occasion arises for deciding the justification of the applicability of the proviso to sub -s. (1) of s. 145 and the only question is whether sub -s. (2) of s. 145 is attracted. We find that the Tribunal has not taken into account subsection (2) of s. 145 for deciding the appeal before it and the same has been decided only on the question of applicability of the proviso to sub -s. (1) of s. 145 on which the Revenue does not even rely." (p. 68) ;