AO Cannot Alter Gross Profit Rate Applied by Assessee without Objecting to Books of Accounts under Income Tax Act: Allahabad HC

The Allahabad High Court ruled that under the Income Tax Act, the Assessing Officer cannot alter the Gross Profit Rate accepted by the Commissioner of Income Tax (Appeals) unless objected to before the Income Tax Appellate Tribunal.\r

In a case involving Mahabir Jute Mills Ltd, the Assessing Authority rejected the books of accounts, adjusting the gross profit rate based on past years' rates. However, the CIT(A) and the Income Tax Appellate Tribunal accepted the books, noting that only minor expenses were unaccounted for. \r

The High Court upheld their decision, stating that since the books were accepted, there was no basis to reject them. The Department's appeal was dismissed as the CIT(A)'s decision was not contested before the Tribunal.