RATANLAL OMPRAKASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Cuttack Bench of the Income-tax Appellate Tribunal has stated this ease pursuant to an order of this court under Section 256(2) of the I.T. Act, 1961 (hereinafter referred to as " the Act"), and has referred the following question for opinion of the court:

(2.) THE year of assessment is 1974-75, ending with the accounting period October 25, 1973. THE assessee deals in handloom and mill-made cloth. It disclosed a gross profit of Rs. 73,570 on a total turnover of Rs. 12,90,690 in handloom cloth which worked out to about 6 per cent, (of the turnover). In regard to sale of Rs. 3,05,000 worth of mill-made cloth, it returned a loss of Rs. 185. THE ITO, in the absence of properly maintained books of account and particularly on account of the non-maintenance of day-to-day stock particulars, rejected the assessee's book results and estimated the sales of handloom cloth at Rs. 13 lakhs and that of mill-made cloth at Rs. 3,10,000. On the basis of the past record, the assessing officer applied a gross profit of 6J per cent, in handloom account and 5 per cent, in mill-made cloth account. THEreby the gross profits were found to be Rs. 92,713 as against Rs. 73,570.