NATIONAL PLASTICS INDUSTRIES Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) Aggrieved from the order of the Commissioner of Income Tax (Appeals), the Assessee as well as Revenue Department had filed appeals being ITA 2000/M/1996 and ITA 2550/M/1996 in relation to the Assessment Year 19921993 respectively. Both these appeals were dismissed. The Assessee has questioned the correctness of the order impugned in the present appeal primarily on the ground that the Tribunal has erred in law in rejecting the book result of the appellant while invoking the provisions of section 145 of the Income Tax Act and confirming the addition of Rs. 45,27,208/on account of alleged undisclosed gross profit. According to the Assessee, these questions of law arise for determination out of the finding of the Tribunal.

(2.) Dealing with the contentions raised before it, the Tribunal noticed that the Assessing Officer after rejecting the trading results as reflected in the Books of Account determined the sales of the Assessee and applied the gross profit rate of 25% as against 7% shown by the Assessee and this led to addition of Rs.61,21,344/. It was reduced by the Tribunal to Rs.45,00,000/upon appeal. It also noticed the deficiencies pointed out by the Assessing Officer in the Books of Account stating the principle that certain amount of guess work may have to be applied in such cases, so far as exercise of power by Assessing Officer is bonafide. Once the authorities had come to the conclusion that books of account were not properly maintained and suffered from deficiencies, the Assessing Officer was justified in computing income on reasonable basis in appropriate manner.

(3.) It is relevant to refer to Dhondiram Dalichand v. Commissioner of IncomeTax, Poona, 1971 ITR 609, where the Division Bench of this court assessing facts of the case concluded that absence of qualitative tally about stocks of purchase and sale were sufficient material to enable the department to proceed to assess the profits of the assessee. The court observed that Income Tax Officer need not make explicit statement showing that method of accounting employed by assessee is such that profits made cannot be properly deduced therefrom. It is sufficient if his order has the effect of impliedly recording such a finding. These observations are relevant in view of the finding of the Assessing Officer that in absence of stock register as also the quantitative details of the stock of finished goods it was not possible to verify correctness of stock shown by the assessee.