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TMI Blog1978 (2) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year the assessee had disclosed 15.5 per cent on receipts of Rs. 2,09,341 which was raised to 18 per cent. The ITO felt that the profit shown was rather low. The books of account, moreover, continued to suffer from the same defects as in the past. He, therefore, applied the proviso to s. 145(1) and by adding Rs. 5,000 in the trading account, he raised the gross profit rate to 19.5 per cent. 3. The assessee appealed to the AAC against the trading account addition of Rs. 5,000 made by the ITO. The AAC left that the addition made by the ITO was too low. He noticed that in the immediately preceding year the assessee had started calendaring work but in that year the receipts from this activity were only Rs. 5,273. In the relevant previous y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts, no submissions were made in support of its reasonableness. The learned AAC, however, felt that the bifurcation of the manufacturing-cum-trading account by the assessee was without any basis and, therefore, the trading account of calendaring work could not be considered separately from the other trading account. The learned AAC also found on going through the books of accounts that the assessee had tried to suppress the profits by inflating expenses. In this context, he had pointed out that the expenditure on wages this year is Rs. 39,213 against Rs. 21,875 last year. No attendance register of labour was maintained and the entries in the cash book regarding payment of wages were not from day-to-day but were no fortnightly basis and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts of Rs. 2,70,000. He determined the assessee s net income at Rs. 67,500 against Rs. 23,290 worked out by the ITO and that resulted in the enhancement of the income by Rs. 41,210. 4. Against the order of the AAC the assessee has come up in appeal. It is submitted by the learned Counsel for the assessee that the show cause notice for enhancement had only indicated that the gross profit shown by the assessee at 17 per cent low in view of the fact that the calendaring receipts had increased from 5,330 and odd last year to Rs. 51,361 and the profit on such receipts was about 50 per cent. The learned AAC had proposed therein that 50 per cent would be applied on the calendaring receipts and 14 per cent on the other receipts. No defects in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AAC that there was no sale of coal by private parties in the relevant previous year is not correct at all. He further said that the non-mention of sale-tax registration number could not vitiate the voucher. Further he said that if the learned AAC he any doubt about this transaction, he should have called upon the assessee and also examined Shaffi Mohd. Co. The learned Counsel further stated that in the immediately preceding assessment year the AAC had discovered that the wages had been inflated by wrong totalling from Rs. 11,409 to Rs. 19,214. He said that there was no such finding in the relevant previous year. Proceeding further the learned counsel said that there was no justification at all for applying s. 145(2) in-as-much as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the increase in expenses was because of the increase in the business activity which is evidenced by the fact that the calendaring receipts increase from Rs. 5,000 and odd to Rs. 51,361 and the other receipts increased from Rs. 2,09,341 to Rs. 2,13,787. In such circumstances, we feel, the learned AAC was not justified in coming to the conclusion that the expenses were excessive and that the assessee had deliberately inflated the expenses in order to reduce the profits. The learned AAC had not mentioned specifically and item of bogus or fictitious payment in respect of these expenses nor has he said that the entries in the books of account were manipulated. Further, the purchase of coal was duly supported by vouchers. The learned AAC could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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