V GOPAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is the proprietor of a tailoring establishment run under the name and style of "G. Tex Tailors" at Madurai. THE order books and collections chittai for the assessment years 1981-82 and 1982-83 were compared and the Income-tax Officer found that a portion of tailoring receipts to the extent of Rs. 1,53,000 and Rs. 3,35,377 were omitted by the assessee.

(2.) ON appeal, the Commissioner reduced the tailoring receipts omitted by the assessee to Rs. 1,25,000 and Rs. 2,00,000, respectively. The assessee took up the matter to the Appellate Tribunal, where it was contended on behalf of the assessee that the actual omissions on the basis of the statements prepared by the assessee came to Rs. 1,29,664 and Rs. 1,81,806, respectively. The assessee further claimed that deduction should have been given from these amounts towards stitching charges that might not have been received by the assessee on account of non-delivery of stitched clothes. The assessee further claimed that the normal rate of gross profit in this business is 40 per cent. and if the above omissions are added to the assessee's trading receipts, the resultant gross profit would go up to 66 per cent, to 71 per cent, for these two years.

(3.) THE learned senior advocate appearing for the petitioner has further submitted that in the process of making the garments, the lining cloth, buttons and other tailoring materials are absolutely necessary and the amounts spent for the abovesaid purpose must be deducted in and out of the gross profit, said to have been earned by the assessee. We feel that there is some force in the said submission of the learned senior advocate for the assessee. It is common knowledge that making of garments involves wages for stitching, costs of lining cloth, buttons and other tailoring materials, without which a garment cannot be completed.