COMMISSIONER OF INCOME TAX Vs. PAWAN KUMAR

JUDGEMENT

(1.) THE Revenue has filed this appeal under s. 260A of the Income -tax Act, 1961 (for short 'the Act'), against the order of 2001 -02 raising the following substantial questions of law :

(2.) THE assessee was engaged in the business of manufacturing and sale of bricks under the trade name of M/s Sadhu Ram Pawan Kumar & Co. BKO in his individual capacity. He was also enjoying share income as a partner, from M/s Garg income was accompanied by audit report in Form No. 3CD comprising of balance sheet, trading account, P&L a/c, coal account, capital account of the proprietor and other details. The return of income was processed under s. 143(1)(a) of IT Act at the returned income. Thereafter the case was selected for scrutiny. During the course of assessment proceedings the AO noticed that one Shri Gaurav Garg had shown purchases of 1,28,000 number of bricks on credit basis for a sale consideration of Rs. 1,44,000 from the assessee. The aforesaid information was put to verification. After that the AO came to the conclusion that the assessee had been manufacturing the bricks and selling them outside the books and as such sales were not being disclosed in the return of income -tax. The AO also noticed certain more discrepancies. AO worked out the number of bricks at 57,75,000. The AO also accepted the figure of opening and closing stock disclosed by the AO (sic. -assessee) and thus the same had been worked out to Rs. 67,66,725. The AO applied GP rate of 14 per cent on the aforesaid estimated sale of Rs. 67,66,725. In this manner, GP was worked out at Rs. 9,47,340 as against returned GP of Rs. 3,13,568 and the addition of Rs. 6,33,772 was thus made.

(3.) THE assessee filed an appeal before the CIT(A). The CIT(A), Hisar after considering the submissions of both the parties opined that the assessee sold the bricks outside the books of account and thus, the books of account produced before the AO deserves to be rejected and held that s. 145(3) of the Act was applicable.