ITA No. 144 of 2000 [1] IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 144 of 2000 Date of decision: 21.1.2020 M/s Gopal Mills Appellant v. Commissioner of Income Tax, Patiala and another Respondents CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Mr. Alok Mittal, Advocate for appellant. Mr. Kunal Sharma, Senior Standing Counsel for revenue. AVNEESH JHINGAN, J. assessee is in appeal under Section 260A of Income Tax Act, 1961 (for short, 'the Act') against order dated 12.7.2000 passed by Income Tax Appellate Tribunal, Chandigarh (for short, 'the Tribunal') allowing appeal of revenue. Following substantial questions of law have been claimed in appeal: (a) Whether in facts and circumstances of case orders Annexures P-1 and P-3 are legally sustainable? (b) Whether in facts and circumstances of case, Income Tax Appellate Tribunal was right in sustaining rejection of books of accounts of assessee- MANOJ KUMAR 2020.01.31 09:54 I attest to accuracy and appellant, same being based on mere presumptions authenticity of this document High Court,Chandigarh ITA No. 144 of 2000 [2] and conjectures which cannot form basis for adjudication? (c) Whether in facts and circumstances of case, addition of Rs.5,41,148/- on account of G.P. rate is legally sustainable in as much as amount surrendered was on account of excess stock which stood credited in trading account and thus was to be taken into consideration for arriving at gross profit rate? (d) Whether in facts and circumstances of case, Income Tax Appellate Tribunal was right in sustaining rejection of books of account when there was no discrepancy in books of account subsequent to search and seizure operations? (e) Whether in facts and circumstances of case, Ld. ITAT was right in sustaining addition of Rs.5,41,148/- but not including amount surrendered in trading account for calculation of loss and profit rate? appeal was admitted only with regard to question (c). facts necessary for adjudication of present appeal are that assessment year involved is 1990-91. assessee filed return declaring income of 4,03,566/-. search was conducted on business premises on 11.8.1989, excess stock worth 10,50,000/- was found and it was noted that various books of account were not written upto date. MANOJ KUMAR assessee failed to explain source of investment but Mr. Rajesh Kumar 2020.01.31 09:54 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 144 of 2000 [3] partner surrendered sum of `10,50,000/-. Assessing Officer while framing assessment considered various aspects including that high consumption of electricity for per quintal production and fact that G.P. Rate worked out to 1.12% as compared to 4.49% for assessment year 1988-89, 2% for assessment year 1989-90 and 3% for assessment year 1991-92 and rejected books of account. income was assessed applying rate of 2% as shown in previous year. assessment was finalised vide order dated 12.3.1993 calculating total assessable income as 8,33,845/-. Commissioner of Income Tax (Appeals) (for short, 'CIT') allowed appeal on 29.6.1993 and deleted addition of 5,41,148/- made on basis of estimated gross profit of 2%. revenue preferred appeal before Tribunal. Tribunal set aside order of CIT and allowed appeal on 12.7.2000, hence present appeal. Learned counsel for assessee argued that while making addition of 5,41,148/- on account of G.P. rate, amount surrendered worth 10,50,000/- should have been considered for calculating gross profit. contention raised is not well founded. books of account of appellant were rejected. gross profit as per previous year was considered by Assessing Officer. same cannot be said to be excessive or arbitrary. Tribunal rightly came to conclusion that surrendered amount of 10,50,000/- was on account of un-explained investment in stock. It represented unaccounted transaction and does not represent profit of unaccounted transaction of purchase and sale. There was no convincing reason put forth by assessee justifying low MANOJ KUMAR G.P. Rate. 2020.01.31 09:54 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 144 of 2000 [4] There is another aspect of matter. Assessing Officer while finalising assessment considered profit amounting to 3,06,705/- as covered under surrrendered amount of 10,50,000/- and thereafter made addition. conclusion arrived at by Tribunal is plausible and calls for no interference. No question of law much less substantial question of law arises. appeal is dismissed. (AVNEESH JHINGAN) (AJAY TEWARI) JUDGE JUDGE 21.1.2020 mk Whether speaking/reasoned: Yes/No Whether reportable: Yes/No MANOJ KUMAR 2020.01.31 09:54 I attest to accuracy and authenticity of this document High Court,Chandigarh Gopal Mills v. Commissioner of Income-tax, Patiala and another