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TMI Blog2002 (1) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO applied g.p. rate of 4 per cent on estimated sales of Rs. 21,85,000 and made an addition of Rs. 7,062. The Dy. CIT(A) relied upon a comparable case of Bharat Trading Co. Station Road, Jodhpur, which had declared total sales of Rs. 1,34,48,346 and g.p. rate of 8.9 per cent. Even last year the above firm (Bharat Trading Co.) had declared g.p. rate of 8.3 per cent. After pointing out certain defects in the accounts and after referring to certain details on the issue, the Dy. CIT(A) applied g.p. rate of 10 per cent and enhanced the income of the assessee by Rs. 1,70,000. 3. The learned authorised representative explained that the appellant had maintained quantitative tally and has given weightwise details of each item. The appellant had also maintained stock register. Sales and purchase were fully vouched. The stock register was also produced before the AO and photocopy of the same was also filed before the Dy. CIT(A). Therefore, it was contended that proviso to s. 145(1) is not applicable. The Dy. CIT(A) in para 3 of the appellate order observed that the appellant had maintained stock register in respect of Saria, angle, Patti, garder and iron sheets. He further noted the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the five items of the iron a/c. The quantitative tally datewise of each item were produced before the Dy. CIT(A) and there was no shortage in any of the five items. 3.4. The assessee has shown g.p. rate of 3.58 per cent in iron a/c. in asst. yr. 1988-89 to 1990-91 ranging from 4.78 per cent to 4.2 per cent. The declared profit rate was 3.9 per cent to 4.10 per cent during asst. yrs. 1991-92 and 1992-93. The fluctuation in g.p. rate cannot be considered low. Fluctuation in the g.p. rates was due to market conditions, rise/fall in price of iron and competition. 3.5. The order for asst. yr. 1984-85 shows that the trading account was accepted with specified mention that the books were backed by quantitative tally both purchases and sales and stock register. Similarly, for asst. yr. 1989-90 the order passed under s. 143(3) shows that the trading result in iron a/c was accepted as it was found that the purchases and sales were vouched, quantitative tally was kept and stock register was also maintained. Similarly in asst. yr. 1998-99 the g.p. rate declared was accepted. In view of the past history and acceptance of trading result in all the assessment years, the rejection of trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers vs. Union of India Ors. (2001) 170 CTR (SC) 180 : (2001) 251 ITR 197 (SC); (ii) CIT vs. Sham Lal (1980) 18 CTR (P H) 89 : (1980) 127 ITR 816 (P H); and (iii) Asstt. CIT vs. Mahesh T. Patodia. 3.9. In the present case, even assuming that the proviso to s. 145(1) was applicable in respect of iron a/c the AO was bound to assess the income following the accepted past history of the case as was held in the following decisions: (i) Ram Prakash vs. CIT; (ii) Bana Lal Jat vs. Asstt. CIT 26 Tax World 447 [ITA Nos. 493 494 (Ju)/2000]; and (iii) Asstt. CIT vs. Mahesh T. Patodia. There was no lapse, error or omission on the part of the AO which requires interference of the appellate authority to correct such error, lapse or omission. The learned authorised representative also referred to the mistakes in the order of the Dy. CIT(A). The Dy. CIT(A) had enhanced the income by Rs. 1,70,000 in iron a/c after deducting therefrom the gross profit estimated by the AO. The working of addition of Rs. 1,70,000 is incorrect as follows: Rs. G.P. @ 10 per cent on sales of 21,82,777 2,18,278 Less : G.P. @ 4 per cent worked out by AO 87,400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain whether the nature of business carried on by the assessee at Jodhpur was similar. The Dy. CIT(A) should have compared the trading results with the firms of the same area, of the same nature of trade, of the same year after confronting with the facts of the case to the assessee. Therefore, we hold that the case relied upon by the Dy. CIT(A) was without taking into account the principle of natural justice. Therefore, we hold, keeping in view a number of judgments quoted by the learned authorised representative that the Dy. CIT(A) cannot enhance the income of the appellant without confronting the assessee with the facts of the case relied upon by the Dy. CIT(A). Keeping in view all the facts and the legal position explained above we delete the addition of Rs. 7,062 made by the AO and also the addition subsequently enhanced by the Dy. CIT(A) by Rs. 1,70,000. 7. Ground No. 3 Addition of Rs. 1,000 in colour and paint accounts .In colour and paint a/c the assessee declared g.p. of Rs. 12,800 on sale of Rs. 1,46,280 and g.p. rate of 8.75 per cent. The AO had made an ad hoc addition of Rs. 1,000. The Dy. CIT(A) has confirmed this addition. The learned authorised representative su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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