- (1.) THIS appeal has been filed by the revenue against the judgment of the learned Tribunal dated 16 -5 -2005 deciding cross appeals of the assessee and the revenue whereby dismissing the appeal of the revenue and partly allowing the appeal of the assessee, and maintaining the gross profit rate to be applied at 2.51 per cent.
(2.) THE appeal was admitted on 4 -4 -2006 by framing the following substantial question of law: Whether acceptance of GP Rate by the Tribunal is not sustainable in law because it is based on ignoring the relevant material concerning assessee's own result of the previous year which vitiates the finding? We have heard learned Counsel for the parties, and have gone through the impugned judgments. The assessing officer rejected the books of account for valid reasons, and invoked provisions of Section 145 of the Income Tax Act, and made assessment by applying gross profit rate of 15 per cent on the sales disclosed by the assessee, and accordingly additions were made to the different result. This matter relates to assessment year 2000 -01. The assessing officer for arriving at this conclusion considered that the assessee had disclosed gross profit rate of 2.30 per cent as compared to 2.51 per cent in 1999 -2000, and 16.04 per cent in assessment year 1998 -99. Against that order the assessee filed appeal, and the learned Commissioner upheld the invoking of Section 145, and examined the aspect of gross profit rate to be applied and considered that gross profit rate declared by the assessee during the year is far less than the G.P. Rate (gross profit rate) shown by the other assessees who are in the same line of business, and applied the G.P. Rate at 14.5 per cent. Against this the assessee filed appeal being Appeal No. 448 of 2004, and the revenue also filed appeal being Appeal No. 464 of 2004. The learned Tribunal negatived the contention of the assessee about challenge to invoking the provisions of Section 145. Then, the aspect of gross profit rate to be applied was considered in para 4 and it was found that the assessing officer considered certain cases as comparable applied G.P. Rate of 15 per cent which was reduced in appeal to 14.5 per cent but then it was considered that the assessing officer does not get unfettered powers to apply any G.P. Rate of his choice, and he is supposed to be guided either by the G.P. Rate declared by the assessee or the profit rates declared by the comparable cases. Then, it was considered that in resorting to the application of Gross Profit rate on the basis of comparable cases, it is necessary that those cases, should be, in fact, comparable with reference to the volume of business, location and other host of factors, and it was found that the objections raised by the assessee were not however dealt with, and therefore, in the absence of any change in the factual position normally the profit rate declared and accepted in the preceding year, constitutes a good basis for working out the Gross Profit. Accordingly since in the earlier year the Gross Profit rate declared and accepted was 2.51 per cent, the same rate should be applied by the learned Tribunal for this year also.
(3.) ASSAILING the impugned order it is contended by the learned Counsel for the revenue that in the year 1998 -99 the Gross Profit rate at 16.04 per cent was applied, and therefore, there was no justification for the Tribunal to reduce the Gross Profit rate at 2.51 per cent.;