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TMI Blog1991 (2) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... en, and on that basis it worked out to only 10.95%. The ITO gave detailed reasons why gross profit rate should work out at higher percentage this year even after taking into account the Tribunal's decision for the asst. yr. 1977-78 and he applied a gross profit rate at 16.5% which resulted in trading addition of Rs. 50,689. In the appeal filed by the assessee, the learned CIT(A) took the view that gross profit rate at only 14% should be applied. He, accordingly reduced the gross profit addition to only Rs. 14,643 which is challenged in this appeal before us. After examining the material on record and taking into account the defects noticed by the authorities below in the books of account of the assessee, we are of the opinion that the gross profit rate at 14% applied by the CIT(A) on the basis of the decision of the Tribunal last year is reasonable and requires no interference. This objection of the assessee is, therefore, rejected. 3. The next objection of the assessee is regarding an addition of Rs. 39,299 for alleged closing stock. The assessee firm had suppression of following three partners: (1) Shri Rajmal (2) Shri Bal Kishan (3) Shri Bal Chand There was another fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 39,299 should be deleted. The learned CIT(A) did not accept the arguments of the assessee and in addition to the reasons given by the ITO in his order, gave seven more reasons why he considered that the register and the loose papers belonged to the assessee firm. Those reasons, inter alia, included the fact that M/s Moolchand Pukhraj Co. had been shown as a debtor in the Trial Balance found in those books and hence they could not belong to M/s Moolchand Pukhraj Co. Similarly he pointed out that M/s Mayur Textiles had been shown as a debtor with an amount of Rs. 54,860 and hence it could not belong to M/s Mayur Textiles also. It has also been mentioned that the names of all the partners of the appellant firm find place in the trial balance of those books and papers. He, therefore, confirmed the view taken by the ITO that the books belonged to the assessee firm although discovered at the premises of M/s Moolchand Pukhraj Co. He further held that the assessee had suppressed closing stock by an amount of Rs. 39,299 and hence confirmed the addition. 5. It has been vehemently argued before us that in view of the fact that Shri Rajmal had stated on solemn affirmation in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the orders of the authorities below who had given detailed reasons for coming to the conclusion that these books and loose papers belonged to the assessee firm and hence submitted that the additions made should be sustained. 7. We have carefully considered the arguments advanced from both the sides and have also perused the orders of authorities below and material on record. We are, however, of the opinion that the decision of the authorities below in this regard is correct and that has to be upheld. A large number of items that tally between the regular books of account and the books so discovered, the name of the assessee given on the first page of the relevant register can leave no doubt that the books belonged to the assessee. More so when the assessee has been shifting its stand and has not come out with clean hands. Hence, taking into account these facts and the facts as discussed in detail by the ITO and the learned CIT(A) in their orders, we uphold their view that these books belonged to the assessee. Similarly, after taking into account all the facts and circumstances of the case we do not believe that these books could have belonged to Shri Rajmal, individual, beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tyaryamal Balchand decided by the Hon'ble Rajasthan High Court, the Hon'ble Court had taken note of the fact that intangible additions of substantial amounts had been made in the case of that assessee even in earlier years and had claimed that the impugned cash credits should be taken as having come out of such intangible additions. That assessee had also admitted before the first Appellate Authority that unaccounted trading receipts were temporarily credited in the books. Their Lordships thereafter referred to the decision of the Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah Co. vs. CIT where their Lordships of the Supreme Court had observed that it is a matter for consideration in each case whether the unexplained cash deficits and the cash credits can be reasonably attributed to a pre-existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year. In fact the ratio of the entire decision so also the decisions cited in that judgment is to the effect that if the assessee admits having concealed its earlier income which had been assessed by way of estimated additions and if the Appellate Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the ITO has estimated or worked out the value of the disclosed closing stock at a higher price which becomes the opening stock of next year. It is a case where the assessee has not disclosed the total stock in its regular accounts and hence what has gone as the opening stock of the next year is only the closing stock which was shown in the regular books at Rs. 69,701. The balance of Rs. 39,299 has not been taken in the regular books of account and hence its benefit cannot be given to the assessee as opening stock of next year. Hence this claim of the assessee is also rejected. 12. The next objection of the assessee is regarding a trading addition of Rs. 5,000 made on account of sale of empty drums, bardana, etc. It has been argued by Shri Ranka that the total sales worked out only Rs. 148.50 and hence there was no justification for making addition of Rs. 5,000 on this basis. We find the arguments of the learned counsel reasonable and direct that the addition of Rs. 5,000 to be deleted. 13. The last objection of the assessee is regarding charging of interest under ss. 215 and 139(8) of the IT Act. The learned counsel for the assessee prayed that consequential effect may be all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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