SHREE GAUTAM TEXTILES Vs. ITO

JUDGEMENT

(1.) These two appeals one by the assessee being ITA No. 226/Jd/1999 and the other by the revenue being ITA No. 318/Jd/1999 are cross-appeals directed against the order of learned Commissioner (Appeals), Jodhpur, dated 11-3-1999 and hence the same are being disposed of by this common order for the sake of convenience.

(2.) First we take up the assessees appeal being ITA No. 226/Jd/1999, in which the assessee has raised the solitary grounds disputing the trading addition of Rs. 2,07,506 confirmed by learned Commissioner (Appeals).

(3.) The facts of the case, in brief, are that assessee-firm carrying on a business of textile processing and printing, filed its return of income on 30-10-1996 in compliance to a notice issued under section 148 declaring a total income of Rs. 22,370. This return was initially processed under section 143(1)(a) on 21-4-1997. A survey under section 133A was carried out at the business premises of the assessee on 6-8-1993, and consequently the case was taken up for scrutiny by issuing notice under section 143(2). In the course of assessment proceedings, the assessing officer found that the gross profit rate shown by the assessee is the lowest compared to the gross profit rates declared by the assessee in the preceding as well as succeeding two years. He also pointed out certain defects in the books of account and other records maintained by the assessee and on the basis of the same rejected the trading results shown by the assessee. Looking to the nature of assessees business, past history of the assessees own case, defects in the books of account pointed out by him and the findings of the survey carried out at assessees business premises, the assessing officer applied the gross profit rate of 15 per cent to the total turnover of the assessee which resulted in the trading addition of Rs. 2,07,506. The assessee carried this matter in appeal before the learned Commissioner (Appeals) challenging the applicability of provisions of section 145 in the facts of the case as well as disputing the quantum of trading addition on merits of the case. The learned Commissioner (Appeals) upheld the application of provisions of section 145 in the assessees case on the basis of the defects pointed out by the assessing officer in the books of account maintained by the assessee. He also confirmed the trading addition made by the assessing officer observing that the assessee has not satisfactorily explained the fall in gross profit rate in the year under consideration. Aggrieved by the same, the assessee is in appeal before us.