9911796707
TMI Blog1999 (9) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... were also noted by the AO. Accordingly he was of the view that income cannot be deducted from the records maintained and he accordingly applied provisions of s. 145(2). He noted that the stock maintained by assessee is more than the sales declared by the assessee in respective years. He also noted that assessee is a big retailer and sales shown are not properly shown. He was of the view that in peak months a sale of Rs. 5,000 was reported by the Inspector who was one of the members of the survey partly. He picked 4 months i.e. June, July, October and November as peak months of the business and other months were treated as lean months and in his view a sale of Rs. 4,500 would have been made by the assessee in peak months per day and a sale of Rs. 2,500 per day would have been made by the assessee in lean months. Accordingly he made his own estimation of sales which are as under. The sale figures declared by assessee is also shown as under: Asst. yr. Sales estimated by AO Sales declared by assessee Rs. Rs. 1986-87 8,11,154 5,85,016 1987-88 8,92,270 6,49,825 1988-89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly invoked. The AO noted some of the defects which are given at pp. 2 to 4 of his assessment order for asst. yr. 1988-89. Some of the defects are reproduced here as under : (i) No cash book is maintained. Without cash book it is not possible to ascertain the correctness of the accounts. (ii) The entries in the ledger are also not complete. For example at ledger foil No. 94 the interest a/c shows only an amount of Rs. 13,939 whereas the details filed as per accounts of the partners available in the ledger shows interest expenses of Rs. 27,379. The insurance expenses of Rs. 2,632 is also not finding any place in the ledger. It is stated that the same is paid through bank. (iii) The salary ledger a/c shows entry of Rs. 32,081 including payments up to May, 1987. Entry for the month of June, 1987 is not made in the ledger a/c of salary but found entered in the salaried persons account. (iv) Vouchers of expenses of scooter expenses are found to be partly vouched. (v) No voucher of expenses for shop expenses, travelling expenses and insurance expenses are maintained. (vi) Balance sheet as on 30th June, 1987, shows cash balance of Rs. 4,130 but it has no basis. List of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as less stock with the assessee than what has been shown in the return of income subsequently. This shows that the assessee is engaged in the practice of making sales outside the books of accounts. Though, the defects of stock pertained to the asst. yr. 1987-88, this fact however has got relevance for the asst. yr. 1988-89 also and adverse inference can be drawn. (xi) At the time of survey under s. 133A on 3rd July, 1986, the sales of the assessee per day was estimated by the Inspector at Rs. 5,000 per day in the months of June July, 1986. As per the abstracts taken at the time of survey the average sales for the first 5 days of the month of July, 1986, was Rs. 2,800. But the sales shown for the asst. yr. 1988-89 is far less than the average detected in the first 5 days of the year which falls in the period relevant to the asst. yr. 1988-89. 4. After perusing these defects we are convinced that provisions of s. 145(2) are clearly applicable and the AO as we have already started (sic-stated), has rightly invoked. However, we are not convinced the observations of the AO in regard to enhancement in sales because he himself admitted that the assessee produced ledger of two types ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny justification in CIT(A) s order for confirming the order of the AO on account of estimation of sales. He just confirmed the finding of the AO without assigning any reason. Therefore, we are of the view that the estimation of sales were not justified and accordingly we cancel the estimation of sales made by the AO which was confirmed by the CIT(A). The AO is, therefore, directed to accept the sales as declared by assessee. We do not find any weight in the contention of the learned authorised representative that the GP rate shown by assessee was a correct GP rate as we have already stated that on proper books of accounts were maintained. Therefore, GP rate applied by the AO was very much reasonable and accordingly we confirm the GP rate applied by the AO in all the assessment years involved here before us. For the sake of completeness, the estimation of sales are cancelled in all the years which are here before us and GP rate applied by the AO in all the years are confirmed which are here before us. We have seen the order of the AO in detail and we find that disallowance on account of various heads and on account of sister concern is also justified. We have noted that assessee cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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