9911796707
TMI Blog1980 (4) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... contracts at 8 places in different districts by payment of royalty to the district forest officers. Total amount of the payments to the district forest officers was to the tune of Rs. 1,63,843 and this amount stands included in the total purchase of gum of Rs. 9,36,980. Gross profit as per accounts was 10.5 per cent on sale of Rs. 9,91,035. ITO felt that the profit rate shown was rather low. It was also noticed that the assessee had debited certain expenses in respect of payments to agents for collecting gum from the forests and also expenses for payment of hamali which were not vouched. For these reasons the proviso to s. 145(1) was applied and taking the gross profit at 12.5 per cent, ITO added Rs. 22,000 in the trading a/c. 4. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty varied according to weather conditions. It was further stated that this was the first year of the assessee's business. Referring to the past history when similar business was carried on by the assessee as a partnership concern, it was pointed out that in asst. yr. 1974-75 gross profit was shown at 18 per cent on sale of Rs. 6.48 lakhs but in asst. yr. 1973-74 gross profit of 9 per cent only was shown on sales of Rs. 7.94 lakhs and by lumpsum addition of Rs. 5,000 it was raised to 9.6 per cent. The learned counsel also pointed out that the payment of hamali which was unvouched was of Rs. 2,462 only. With regard to the valuation of closing stock it was pointed out that since the gum at the end of the year was mixed with lot of churi, the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may justify some nominal addition, we are unable to uphold the addition of a substantial amount particularly when proper books have been maintained supported by stock tally and control over production had been exercised by the forest authorities themselves. The assessee's sales are fully vouched. Taking an overall view we feel that at the most Rs. 5,000 could be added to cover the defects pointed out by the ITO. We sustain the addition to that extent. 7. Reg. Item No. (ii): ITO disallowed the sales-tax liability of Rs. 3,075 on the ground that it did not relate to the present business which had been started in this very year. Before the AAC it was admitted that the liability in question did relate to the earlier years but it arose in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and law. 8. Regarding disallowance of Rs. 7420 out of conveyance expenses: Total expenditure claimed was Rs. 29,606. Out of this amount Rs. 10896 is for motor car and Rs. 18790 is for Jeep. It was urged before us that both the vehicles had been utilised for transportation of gum and, therefore, the entire expenditure was for the purpose of the business. The ld. counsel submitted that the disallowance of 1/4th had been made by the authorities below under misconception of facts. The ITO and the AAC were guided by the fact that for the car the assessee had purchased 46 litter of petrol on 30th Aug., 1974 and 129 litre s of petrol had been purchased on 31st Aug., 1974 which would not have been the case if the car had been used for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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