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TMI Blog1993 (3) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the assessee is engaged in processing of grey cloth, both of medium and super fine quality. Subsequently this cloth is sold. The assessee had filed return of income at Rs. 4,63,511. It was assessed by IAC (Asstt.) at Rs. 6,53,185.The main reason for the addition was that whereas according to the ZAC (Asstt.), this year the assessee had disclosed a g.p. rate at 12 per cent and whereas in the preceding year the g. p. rate was 15 per cent, the IAC (Asstt.) had applied a g. p. rate at 13.25 per cent. While doing so he had taken into account various explanations of the assessee including the loss suffered on account of unexpected flood in the near by river where the assessee's factory is located and which should have caused some damage to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted that in spite of floods and damage to the cloth, the rates per meter had increased from Rs. 6.20 to Rs. 7.04 and the total sales had also increased from Rs. 1.27 lacs of last year to Rs. 1.29 lacs this year. The Tribunal further observed that in the absence of any specific reasons except the flood, the low profit as shown by the assessee could not be accepted and that the assessee had not proved that the assessee had suffered loss at roughly about Rs. 3,80,900. The Tribunal further observed at para 6 of its order that by its letter dated 21-7-1979 the assessee had submitted that records regarding production work were washed away whereas the assessee had denied the maintenance of the production records. It also took note of the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in those decisions to canvass that the finding given by the Tribunal in its order was good evidence although it might not be conclusive evidence. He submitted that in the instant case the Tribunal had given a finding of fact that no evidence or satisfactory explanation had been given by the assessee to prove the low gross profit shown by it this year and, thus in fact, had held that the assessee was not able to substantiate the reasons for the difference between the returned and the assessed income and hence in view of the Explanation 1(B) to section 271(1) (c), the penalty was clearly exigible. 6. The learned counsel for the assessee on the other hand argued that it was not a case in which it was claimed that the loss was suffered on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ored to Rs. 1 lac by the Tribunal. In this way, according to Shri Gargieya, there were three opinions and since the assessee had given a plausible explanation which found favour with the CIT (A) as well as with the Tribunal, the penalty either under main provisions of section 271(1)(c) or its explanation could not be imposed. He drew our attention to the Miscellaneous Application which had been filed before the Tribunal after its order. Although that Miscellaneous Application had been rejected by the Tribunal without giving a hearing to the assessee, he reiterated that as per the chart filed on page 13 of the Paper Book the g. p. rate this year worked out to 14.07 per cent against 15.4 per cent of last year and not 12 per cent as considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific concealment made by the assessee nor was it a case that the difference in income was on account of a basis which the assessee had either not explained or which explanation the assessee could not substantiated. In this connection he drew our attention to the cases referred to by him in his written submissions before the CIT(A) and in particular to the decisions of the Delhi Bench in the case of Kuldeep Sood v. ITO [1985] 22 TTJ (Delhi) 532 and of the Bombay Bench in the case of K. G. Nariman alias N. K. Gajwani v. ITO [1989] 33 TTJ (Bom.) 565. He submitted that the ratio of both these decisions was that merely because an explanation given by the assessee was rejected and estimated additions were made, it could not be a basis for im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been made to its income or it has not been able to substantiate its explanation. The comparative chart given on page 13 of the Paper Book does show that the difference between the g. p. rate of last year and this year is only .07 per cent and that too after the loss suffered by the assessee in the floods. Thus while the Tribunal has held in the quantum appeal that the assessee has not been able to fully prove the extent of loss in the floods, it cannot be said that the Tribunal has held that the claim of loss in floods was false. In fact, the Tribunal has accepted that since the factory of the assessee was located near the bed of the river, it did suffer a loss on account of sudden and unexpected floods, but how much was the loss is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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