MALANI RAMJIVAN JAGANNATH Vs. ASSISTANT COMMISSIONER OF INCOME

JUDGEMENT

(1.) HEARD the learned Counsel for the parties.

(2.) AT the time of admission of this appeal under Section 260A of the IT Act, 1961, following question was framed as substantial question of law: Whether, in the facts and circumstances of the case, once it was accepted by the assessing authority that heavy loss to the tune of Rs. 6,45,620 has been caused to the assessee in the business of Supari, accepting the explanation furnished by the assessee that the total fall in the GP rate of the assessee is due to heavy loss in one of the segments of his business, it was reasonably open for the Tribunal to have restored the order of assessing authority, rejecting the result shown by the assessee on the total business by separating the business of Supari and applying thereto increased GP rate. On the turnover of remaining business on the basis of last year's result which included the turnover of Supari business also and to arrive imaginary estimated figure of GP from other business only and thus, reducing net loss computed by the assessee on overall business conducted by him.

(3.) THE AO found that purchases and sales were properly vouched and verifiable though stock register was not kept, but the assessee had furnished inventories of opening and closing stocks which were not found to be incorrect. It also found that position regarding books of account continued to be same as in the past. Thus, the inward carriage, loading and unloading and transportation expenses were partly unvouched and unverifiable. With this admitted position, the AO noticed that there is fall in GP rate in the business as a whole as compared to GP rate shown by the assessee during last asst. yr. 1991 -92. The assessee has shown in the previous year GP rate of 4.63 per cent by taking entire business as a whole, but this year he has shown GP rate of 2.38 per cent only. With this premise, he decided to reject the books of account and asked for explanation of the assessee about the fall in GP rate.