SURESH CHAND TALERA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is an appeal under Section 260a of the IT Act, 1961.

(2.) THE relevant facts briefly are that the appellant carries on inter alia, the business of purchase and sale of silver and gold ornaments at Mandsaur in the State of Madhya Pradesh. For the asst. yr. 1996-97, the appellant filed a return on 2nd Sept. , 1996, declaring an income of Rs. 3,94,558. A survey, under Section 133a of the IT Act (for short 'the Act') was conducted on 23rd Nov. , 1999 and in the course of survey, the appellant made a declaration that there was a shortage of Rs. 2,28,000 in the difference of ornaments and cash. A questionnaire dt. 11th Aug. , 1997 was served on the appellant requiring him to specify the basis of the valuation of the closing stock as per trading. The appellant answered the said questionnaire and thereafter the AO came to the conclusion that there was no consistency in the method adopted by the AO wherefrom true profits from his business could be worked out and, rejected the books of account of the appellant under Section 145 (2) of the Act and made his own assessment of the income of the appellant determining the total income of appellant. In the said assessment, the AO also took into consideration the agricultural income of the minor son of the appellant for the purpose of determining the rate of income-tax applicable to the income of the appellant.

(3.) AGGRIEVED by the assessment order dt. 12th March, 1999 of the AO as well as the demand, the appellant filed an appeal before the CIT (A), Bhopal, numbered as (Appeal No. 11/u-22/1999-2000 ). The first two grounds of appeal related to additions of Rs. 43,742 and Rs. 39,239 on account of low GP on sale of gold and silver ornaments and the appellant urged before the CIT (A) that he had maintained proper books of account and, therefore, the books of account could not be rejected under Section 145 (2) of the Act by the AO but CIT (A) held that the day-to-day stock register and quantitative tally had not been made and further sales were not recorded and, therefore, the provisions of Section 145 (2) of the Act were applicable to the appellant's case. The CIT (A), however, held that the GP rates adopted by the AO were on the higher side and took the view that low GP rates should have been applied and accordingly deleted portion of the additions on account of sale of gold and silver ornaments. In the appeal, the appellant had also urged that agricultural income earned from agricultural land standing in the name of appellant's minor son could not be taken into consideration even for rate purposes for calculation of the tax payable by the appellant on his income but the CIT (A) relying on reasons given by him in his appellate order in the case of appellant for the asst. yr. 1994-95 upheld the order of AO taking into consideration the agricultural income of the appellant's minor son for the purpose of rate applicable to the income of the appellant.