P.GUPTA, J. - (1.) THIS appeal has been filed by the assessee, against the judgment of the learned Tribunal, partly allowing the cross - objections of the assessee, and remanding the matter to the CIT(A). The remand has been made on the aspect of GP rate. However, the learned CIT(A), and the learned Tribunal, upheld the rejection of books of account, and resorting to provisions of s. 145(1) of the IT Act, 1961, challenging which aspect this appeal has been filed.
(2.) "Whether on the facts and circumstances of the case, the learned Tribunal is justified in upholding the order passed by the learned CIT(A) by confirming the rejection of books of account under s. 145(1) of the IT Act, 1961 by the AO is justified and correct -
(3.) THE matter was heard for quite a long time. A perusal of the order of the CIT(A) shows, that rejection of the books of account has been upheld, mainly on the ground, that wastage percentage from fabric to bags is as high as 12.1 per cent, as compared to other cases, in which it is only 2.49 per cent. The learned CIT(A) appears to have compared the case of M/s Kandhari & Kandhari (P) Ltd. The AO has also considered purportedly comparable cases, being M/s Chittor Poly Feb and Kandhari & Kandhari (P) Ltd., and found, that the assessee has declared GP rate of 8.5 per cent only, and concluded, that books of account did not disclose a true and proper income. Arguing the appeal it was contended, that for rejection of books of account, the AO should not be satisfied, about correctness and completeness of the account of the assessee, which precisely is not the finding of the AO. Then, it was submitted, that from the balance sheets etc., already available with the AO, it is clear, that the percentage of waste, rendered in the manufacturing process, is practically consistent from the year 1988 -89 onwards, though in the year 1987 -88, it was as high as 23.41 per cent, and for all other years, this extent of wastage, as shown in the books of account, has been accepted by the AO, and therefore, there was no justification for rejecting the books of account for the assessment year in question only. Then, learned counsel also tried to show, that in cases of other industries, situated at Udaipur itself, manufacturing the same product, and practically employing the same manufacturing process, are also showing the extent of wastage, around the one, as shown by the assessee.;