J.K. Ranka, J. - (1.) THIS income -tax appeal under s. 260A of the IT Act is directed against the order passed by the Income -tax Appellate Tribunal, Jaipur Bench (for short "Tribunal") dt. 30th May, 2008. Brief facts, as emerging on the face of record, are that the appellant -assessee is a private limited company involved in extraction of oil from mustard seeds and also manufacturing/purchasing mustard oil and mustard oil cake. During the previous year, relevant to the asst. yr. 2004 -05 under appeal, the appellant -assessee declared a total sale of Rs. 24,62,85,578 declaring a gross profit of Rs. 1,16,37,333 giving a GP rate of 4.73 per cent as against total sale of Rs. 24,15,73,513 with gross profit of Rs. 1,96,70,344 giving a GP rate of 8.14 per cent in the immediately preceding assessment year. It has been observed by the AO that the GP rate has drastically declined in comparison to not only the immediately preceding year but also the year preceding to that. It is the claim of the appellant -assessee that it has maintained complete books of accounts supported by supporting material i.e. bills, vouchers, stock register and yield of manufacturing is also reasonable. However, the AO was not satisfied and came to the conclusion that not only the GP rate has fallen drastically but also the yield rate of mustard oil is substantially lower in comparison to other concerns as also in the case of appellant -assessee itself. The AO was not satisfied with the explanation offered by the appellant -assessee. In the assessment order, it has also been observed by the AO that assessee has also failed to produce for verification the stock register of production and sale of mustard cake for the year. Not being satisfied with the overall explanation, as stated aforesaid, the AO invoked provisions of s. 145(3) of the IT Act, 1961, rejected the trading results and applied a GP rate of 6 per cent on the total sale declared by the appellant -assessee and made a trading addition of Rs. 31,39,802 (Rs. 1,47,77,135 - Rs. 1,16,37,333).
(2.) DISSATISFIED with the trading addition so made by the AO, the appellant -assessee preferred an appeal before the CIT(A), Alwar. Before the CIT(A) detailed explanation, as has been reproduced in the order of the CIT(A), was offered by the appellant -assessee. However, insofar as the factum about stock register is concerned, even the CIT(A) has observed that "further the appellant has not maintained records regarding quality of mustard seeds purchased by him. It is also seen that the appellant has also not produced the stock register for verification regarding production, sale of mustard cake for the relevant period". He also observed that the loss (driage) has been recorded in a very tentative style and in the manner which suits the appellant. However, the CIT(A) considering all facts partially sustained the trading addition of Rs. 6,50,000 as against the addition made by the AO amounting to Rs. 31,39,802. Dissatisfied with the sustenance of the addition of Rs. 6,50,000, an appeal came to be filed by the appellant -assessee before the Tribunal, who vide order impugned, has also sustained the said trading addition. While doing so, it has also been observed by the Tribunal that "The assessee has not produced the stock register for production and sale of mustard cake and therefore, the production and sale of the mustard cake declared by the assessee cannot be relied upon and therefore, the consequent yield declared for the mustard oil can also not be relied upon. Therefore, we find no infirmity in the order of the learned CIT(A) who has rightly upheld the applicability of s. 145(3) of the Act. As regards the estimation, we concur with the views of the learned CIT(A) who has rightly estimated the income and rightly sustained the addition Rs. 6.50 lacs". The appellant has challenged this addition in the present appeal.
(3.) IT is the claim of Mr. Anant Kasliwal, learned counsel for the appellant -assessee that not only the Tribunal but CIT(A) as well as the AO have ignored the material fact that the appellant -assessee did maintain the stock register and the same was produced before the AO and other authorities. Learned counsel also submits that even the chartered accountant in its report in Form 3CD (Annex. 1) has specifically observed that the appellant -assessee did maintain the stock register and this report of the chartered accountant was submitted along with return of income submitted by the appellant -assessee. He further submits that when stock register has been maintained and no defect has been notified and when all purchases so also the sales are vouched and no defect has been noticed by the AO, then provisions of s. 145(3) cannot be invoked. He further submits that once the stock register has been maintained, then the books of accounts have to be held to be completely verifiable and no addition can be made. He also relied upon a judgment of Hon'ble Gauhati High Court rendered in the case of Swapna Rani Sarkar vs. CIT & Ors. : (2010) 230 CTR (Gau) 177: (2010) 36 DTR (Gau) 64: (2010) 320 ITR 70 (Gau). He also submits that the results were fair and reasonable and there was no justification for sustaining the aforesaid addition of Rs. 6,50,000 which has been made merely on estimate basis without any concrete evidence. He also submits that substantial questions of law arise out of the order of the Tribunal which require consideration by this Court.;