Pansari Gems International vs Commissioner of Income Tax

Heard on question of admission as well as interim stay. The appeal has been preferred under s. 260A of the IT Act, 1961, questioning the order dt. 26th Oct., 2009 passed by CIT(A) and order dt. 19th March, 2010 passed by the Tribunal. For the asst. yr. 2006-07, the AO applied GP rate of 19.43 per cent as against the GP rate of 15.79 per cent declared by the assessee. The CIT(A) upheld the application of GP rate @ 17 per cent. The Revenue filed an appeal before the Tribunal against the reduction in comparison to gross profit of 17 per cent as against 19.43 per cent, while the assessee in appeal raised the question of GP rate of 15.79 per cent declared by it instead of 17 per cent determined by the CIT(A). The question involved in both the appeals before Tribunal was with respect to GP rate; the Tribunal, after considering all the facts and circumstances of the case, arrived at the finding of GP rate of 17 per cent to be reasonable. The appeals of Revenue as well as assessee had been dismissed by the Tribunal. Consequently, the assessee has come up in the present appeal before us.

Mr. N.L. Agrawal, counsel appearing on behalf of the appellant-assessee has submitted that findings recorded by the CIT(A) as well as Tribunal cannot be said to be in accordance with law. Books of accounts of the assessee could not have been rejected on the ground it has been rejected. GP rate of 15.79 per cent, declared by the assessee, ought to have been accepted.

After considering submissions of counsel appearing on behalf of the appellant, we find that discussion made by the Tribunal is appropriate. The Tribunal has taken into consideration the various factors on which the GP rate is dependent, i.e. on the cost of purchases and sales. The assessee had filed a chart showing purchases and sales of 35 items. In these items, the rate of profit has varied from 6.32 per cent to 26.45 per cent. The gross profit on sales to the extent of Rs. 59,40,181 is around 13 per cent. The total turnover during the year under reference is Rs. 8.86 crores. The Tribunal has held that GP rate does not depend on the basis of specification of item, but it depends upon the quality, shine etc. The assessee has earned gross profit which varied from 6.32 per cent to 26.45 per cent, but from the chart filed by the assessee, it cannot be concluded that GP rate declared by the assessee was correct. AO has found that purchases were not fully verifiable. The books of accounts were rejected for various reasons. Previous year also GP rate was 18.87 per cent and this year, it has been accepted at 17 per cent by the CIT(A) and the order passed by the CIT(A) has been affirmed by the Tribunal. In view of the reasons assigned by the CIT(A) as well as the Tribunal in its orders, we find that no substantial question of law arises in the present appeal. The facts of the case and the evidence have been properly appreciated by the CIT(A) as well as the Tribunal. Consequently, the appeal is bereft of merits and the same is, accordingly, dismissed. The stay application is also dismissed.