COMMISSIONER OF INCOME TAX Vs. REGISTAN P LTD

JUDGEMENT

(1.) HEARD learned counsel for the Revenue. No one has appeared for the respondent in spite of service.

(2.) THE application under S. 256(2) of the IT Act, 1961, relates to asst. yr. 1977-78. The assessee has filed return in the first instance showing gross profit of Rs. 13,82,833 which disclosed gross profit rate of 15.20 per cent of its total turnover. This was far below as compared to preceding year's gross profit rate. For the asst. yr. 1976-77, the assessee has shown gross profit rate of 32.4 per cent on gross profit (sic-turnover) of Rs. 34,88,368. On being required to show cause for steep fall in the gross profit rate the assessee has filed revised return for the asst. yr. 1977-78 showing the return of Rs. 17,03,942 showing gross profit rate of 20 per cent. Simultaneously the assessee has also filed return for 1976-77 disclosing the profits of the previous assessment year at the gross profit rate of 23.86 per cent. The assessee has also stated that from 31st Dec., 1979, the firm was not in existence and it has been dissolved and thereafter a company has been formed. It is also pertinent to notice here that when the assessee has filed revised return for 1976-77 along with revised in return for 1977-78 the assessment for the year 1976-77 has already been completed. The AO completed the assessment for 1977-78 on the basis of gross profit declared by the assessee as per his revised return. The order was affirmed by the AAC. However, on second appeal before the Tribunal the Tribunal has accepted and held that since the AO has not accepted the revised return for 1976-77, the AO was not justified in accepting profit returned as per revised gross profit of the year 1977-78 and revise the gross profit to the amount of the original return. In the aforesaid circumstance, the Revenue filed the application under S. 256(1) before the Tribunal for stating the case and referring the following questions suggested by the Revenue to this Court :