COMMISSIONER OF INCOME TAX Vs. SANTOSH JAIN

JUDGEMENT

(1.) THIS appeal has been preferred proposing following substantial questions of law :

(2.) THE assessee derives income from manufacturing and sale of iron and steel goods of rolling mills besides dealing in search was carried out in the premises of the assessee. The assessee made a surrender of Rs. 14 lakhs. From the account books and other documents seized at the time of search, it was found that the assessee was doing business outside the books of account. The AO, as against declared sale of Rs. 28.01 crores, assessed turnover of the assessee at Rs. 30 crores, estimating turnover of Rs. 1.99 crores outside the books of account. The AO applied GP (rate) of 4.27 per cent against 3.23 per cent shown by the assessee on the ground that in the earlier years, GP (rate) of 4.27 per cent had been applied and there was no justification for showing the lesser GP.

(3.) THE CIT(A) held that there was no justification for disallowance of cash payments in excess of limit laid down under s. 40A(3) of the IT Act, 1961 (in short, 'the Act') of the unrecorded transactions. The CIT(A) approved 4.27 per cent GP on unrecorded sales.