COMMISSIONER OF INCOME TAX Vs. MANGAL ENGINEERING WORKS

JUDGEMENT

(1.) THE Revenue has filed this appeal under s. 260A of the IT Act, 1961 (for short "the Act"), against the order of the relating to the asst. yr. 1996 -97 whereby the Revenue's contention that the income of the assessee be determined by application of a net profit rate of 20 per cent has been rejected.

(2.) THE AO had rejected the books of the assessee and determined the income from bakery business by applying a net profit rate of 20 per cent to the declared sales of Rs. 2,28,60,250. The basis for applying a net profit rate of 20 per cent was that the assessee had made a declaration under s. 68(2) of the Voluntary Disclosure of Income Scheme, 1997, in which a sum of Rs. 5 lakhs had been offered for assessment on undeclared sale of Rs. 19,10,000 made through one Shri Jai Parkash, Proprietor, M/s National Engineering Works, Patiala.

(3.) THE Tribunal has disapproved this approach. Although the rejection of books of account has been upheld but it has been observed that the income had to be determined on the basis of the past history. The Tribunal, referring to the GP rate applied and accepted by the Department in the earlier years, held that the CIT(A) was justified in reducing the addition by applying the GP rate of 22 per cent as per the past history of the case. Relevant findings are contained in para 9 of the order, which reads as under :