- (1.) THIS appeal has been preferred under Section 260A of the IT Act, 1961 (for short, the Act) against the order of Tribunal, Chandigarh Bench 'B' in ITA No. 123/Chd/1999 in respect of asst. yr. 1991 -92. :
(2.) THE substantial questions of law sought to be raised are as under: (a) Whether, on the facts and circumstances of the case, the authorities below were justified in upholding the action under Section 145(2) ? (b) Whether, on the facts and circumstances of the case, the Tribunal and authorities below were justified in sustaining the addition made by AO on account of GP rate variation as compared to earlier year and thereby applying an arbitrary and hypothetical rate instead of actual GP earned and declared by the appellant more so when a surrender on account of stock has already been made by the appellant and accepted by Revenue. (c) Whether, on the facts and circumstances of the case, the Tribunal was justified in concurring with the authorities below in not giving credit of surrendered amount especially when the AO had earlier admitted that the same should be available and later changed his version without any cogent reason supported by evidence. (d) Whether, on the facts and circumstances of the case, the decision of Tribunal is perverse as there is no evidence that the surrender was made to cover any specific defects and thus should have been available for set off against addition on account of GP. (e) Whether, on the facts and circumstances of the case, the decision of Tribunal is perverse being based on erroneous criteria and irrelevant factors and is thus liable to be set aside. The facts are that during the course of assessment, the AO found that the assessee was not maintaining any quantitative tally or details of various items and noticing discrepancies in stock found at the time of survey conducted at the premises of the appellant, the books of account were rejected by invoking provision of Section 145(2) of the Act. The AO has further found that the assessee had shown GP at 27.48 per cent as against 30.43 per cent for the last year. He estimated GP at 28 per cent and made an addition of Rs. 2,07,958. On appeal, the matter was remanded to consider whether the assessee was declaring an abnormally high profits while claiming excessive expenses to reduce net profits. Even after remand, the AO reiterated his earlier order. On appeal, the said order was affirmed by the CIT(A) with following observations: It is thus obvious that certain items of disallowable nature or inflated items of expenditure were being debited in the P&L a/c. Since the present addition is an estimate addition to plug such loopholes as the rejection of the books of accounts has already been confirmed by my learned predecessor and the assessment being made by invoking the provisions of Section 145(2) of the IT Act, 1961, the nominal addition of Rs. 2,07,858 therefore, confirmed and the appellant's plea on this account is dismissed.
(3.) IN further appeal to the Tribunal, the findings recorded by the CIT(A) were confirmed with the following observations: We have also considered the alternative plea of the assessee that the surrender of Rs. 2 lakhs should cover against the addition of GP. On the facts and circumstances of case, we are of the considered view that since the assessee has himself shown a higher GP rate in the preceding years, the estimate of GP @ 28 per cent adopted by the AO by invoking the provisions of Section 145(2) was justified. We are also of the opinion that the surrender of Rs. 2 lakhs during survey would not cover against the addition on account of GP as the same was made against specific items detected at the time of survey under Section 133A. Therefore, we do not find any force in the arguments of the assessee in respect of the surrender of Rs. 2 lakhs. Accordingly, we do not find any infirmity in the order of the CIT(A) and upheld the same. Ground raised by the assessee stands rejected and the appeal dismissed.;