COMMISSIONER OF INCOME TAX Vs. OM OVERSEAS

JUDGEMENT

(1.) THE Revenue has filed the present appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as the "Act") against 2001 -02 raising the following substantial questions of law : "1. Whether on the facts and in the circumstances of the case, the learned Tribunal was right in law in upholding the order of the CIT(A), in deleting the trading addition of Rs. 20,83,752 made by the AO, as the assessee failed to produce the quantitative details of raw material and finished products ?

(2.) WHETHER on the facts and in the circumstances of the case, the findings recorded by the learned Tribunal are perverse and contrary to material available on the record - 2. The respondent is a partnership firm deriving income from the manufacturing and export of Duries, Rugs, woollen subsequently the assessee firm was assessed under s. 143(3) of the Act, 1961 at an income of Rs. 14,60,740. The assessee declared gross profit of Rs. 3,30,18,576 on the total turnover of Rs. 13,00,80,622 giving the Gross Profit Rate (GPR) of 25.38 per cent as against 29.5 per cent declared in the immediate preceding assessment year.

(3.) THE AO required the respondent to explain the decline in the GPR for the relevant assessment year. The explanation furnished by the respondent in this regard was found to be unsatisfactory. Therefore, the AO rejected the books of account of the assessee by invoking the provisions of s. 145(3) of the Act and applied the GPR of 27 per cent which resulted in addition of Rs. 20,83,752.