COMMISSIONER OF INCOME TAX Vs. PRAYAG WINES

JUDGEMENT

(1.) This is an appeal filed by Income Tax Department under Section 260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal, Lucknow for the assessment year 2005-2006.

(2.) The assessee caries on the business of purchase and sale of country liquor, Indian Made Foreign liquor and beer through 28 shops at various locations in Allahabad, Pratapgarh and Jaunpur districts. For the said assessment year, the assessee filed his return under Section 139 of the Act disclosing the total income of Rs. 14,99,890.00 and claiming refund thereon. The case was processed under Section 143(1) of the Act resulting in refund of Rs. 6,83671.00, which was issued to the assessee. Subsequently, the case of the assessee was selected for the scrutiny and a notice under Section 143(2) of the Act was issued to the assessee. The Assessing Officer, subsequently, passed an order under Section 143 (3) of the Act computing the total income of the assessee at Rs. 65, 15, 451. The Assessing Officer observed in its order that the assessee had disclosed the gross profit of Rs. 1,39, 27, 677.00, which was on the lower side and that the gross profit works out to Rs. 1,89,00,000, thus, resulting in extra profit addition of Rs. 49,72,323.00.

(3.) The reason for enhancing the income was rejecting the books of account and applying the provision of Section 145(3) for estimation of gross profit. The rejection of the books of account was on account of the fact that cash memo for individual sales was not issued and that a single cash memo was issued for each day. The Assessing Officer also noticed that the opening and closing stock of each shop was not verifiable.