HARGOPAL SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS appeal is directed against the order of the Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short

(2.) ASSESSEE derives income from manufacturing and sale of sweets and snacks. For asst. yr. 1996 -97, he filed his return declaring an income of Rs. 3,96,720. The AO noticed that the assessee had failed to supply item -wise details regarding consumption of material used for manufacturing of its products on the ground that it was not possible to maintain such records in this line of business. Assessee also could not produce stock register in respect of consumption and production of material consumed and sold. The AO was of the view that it was not possible for him to compare the input with output which was vital for determination of correct income. He further noticed that in the year under consideration assessee had shown a gross profit rate of 22.5 per cent, whereas the Tribunal in the case of the assessee for asst. yr. 1989 -90 had upheld the application of GP rate of 25 per cent. Even in asst. yr. 1993 -94, the AO had applied the GP rate of 25 per cent. In view of these circumstances, the AO rejected the books of the assessee by invoking the provisions of s. 145(2) of the IT Act, 1961 (for short the 'Act'), and applied a GP rate of 25 per cent on the total sales of Rs. 43,86,556. Accordingly, he made an addition of Rs. 1,09,817.

(3.) AGGRIEVED by the order of the AO, assessee preferred an appeal before the CIT(A) which was rejected. On further appeal, the Tribunal also upheld the findings of the AO.