ORDER
Deepak R. Shah, A.M.
1. This appeal by Revenue is directed against the order of learned CIT(A), Panaji, Goa, dt. 6th Nov., 2001.
2. The Revenue has raised the following grounds before us:
The CIT(A) erred by allowing relief of Rs. 3,52,727 out of the total GP addition of Rs. 5,52,727 made by the AO without giving any findings to reduce the GP addition to Rs. 2,00,000.
The CIT(A) ought to have considered the fact that the assessee has declared GP of 3.06 per cent during this year as against GP of 7.12 per cent declared for the asst. yr. 1997-98.
The CIT(A) ought to have appreciated the fact that the assessee has not maintained day-to-day quantitative details and day-to-day stock register in the absence of which the AO has rightly estimated the GP at the rate of 5 per cent.
3. Learned CIT(A) held that the GP in appellant’s case has no much correlation with the turnover or the result. Even much lesser GP rate has been approved in asst. yr. 1994-95. In subsequent year, the assessee has declared higher GP rate. He also held that no defect is pointed out in books of account so as to reject the same. He accordingly sustained the addition of Rs. 2,00,000 as against Rs. 5,52,000 made by the AO.
4. Learned Departmental Representative strongly supported the assessment order. He submitted that the assessee though dealing in as many as twenty varieties of betel nuts, he is not maintaining day-to-day stock register in respect of each variety. The assessee has maintained total quantity details but not in respect of each variety. Thus, it is difficult to compute the closing stock. Due to substantial difference in the GP as declared compared to previous year the addition made by AO is required to be upheld.
5. Learned Counsel for assessee, Shri Srikrishna Kelkar strongly relied upon the order of learned CIT(A). He submitted that the total quantity details in respect of all the varieties together is available. There is no provision in the Act to maintain the day-to-day stock register in each variety. The reason for fall in GP has been explained and only after the same has been considered by learned CIT(A), reduction was allowed. He also relied upon the decision of Tribunal, Jaipur Bench, in Triveni Pharma v.
ITO ITA No. 133/Jp/2001, dt. 14th Oct., 2004, (2004) 85 TTJ (Jp)(TM) 950.
6. We have carefully considered the relevant facts and argument advanced, we are inclined to accept the finding of learned CIT(A). The fall in GP is not a criteria to reject the books of account. There is no provision in the Act which suggest that day-to-day stock register has to be maintained or in absence thereof the books of account are liable to be rejected. What is required to invoke proviso to Section 145 or to reject book results is to establish the incorrectness and incompleteness of the accounts, or where method of accounting followed by assessee is inconsistent with the accepted method of accounting. Since no such case has been made out by the AO, the AO is not justified in rejecting the book results and making addition.
In the result, the appeal is dismissed.