INCOME TAX OFFICER Vs. OSWAL EMPORIUM.

JUDGEMENT

(1.) THE revenue in their present appeal have taken, inter alfa, the following grounds :

(2.) THE 1d. CIT (A) was not justified in treating the counter sales of Rs. 11,25,829 at per with the export sales of Rs. 20,612 for allowing weighted deduction under Sec. 35B of the IT Act.;

(3.) THE first ground is to the effect that the 1d. CIT (A) was not justified in accepting the book result and the g. p. rate of 42 per cent as against 44 per cent applied by the ITO. The assessed is a registered firm by status and maintains its accounts on mercantile basis. Accounting period was the year ending 31-3-1980. On a total turnover of Rs. 38,83,847 the assessed appears to have declared a gross profit of Rs. 14,52,165, according to the 1d. ITO giving a gross profit rate of 42 per cent. However such rate in the chart at page 1 of the paper book is mentioned as 43.73 per cent. The 1d. ITO comparing the gross profit rate with the earlier asst. years considered that the same was indeed low and without justification. He also noted that the assessed failed to file details of opening and closing stock and so also the basis of valuation of the stocks. The valuation of the closing stock was seen to be unverifiable. It was also noted that the sale of goods and the price charged were not verifiable. In view thereto the profit earned on particular items could not be ascertained. The 1d. ITO also relied upon several comparable cases where higher gross profit rates had been returned. In view of these specific defects picked up by the 1d. ITO he rejected the books of accounts applying proviso existing under Sec. 145(1) of the IT Act, 1961 and in fact made an addition of Rs. 1,01,060 by applying a gross profit rate of 44 per cent on the estimated and effective sales of Rs. 34 lakhs against the sales of Rs. 33,20,587 shown. The addition was in fact made, inter alia, with the following observations :-