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TMI Blog2002 (8) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... diesel locomotive parts to the railways. Trading results compared to last two years are as under: Asst. yr. Sales (Lacs) Gross profit Percentage 1990-91 26.36 5.84 lacs 22.16% 1991-92 40.92 7.08 lacs 17.30% 1992-93 47.52 7.65 lacs 17.11% The AO pointed out that the assessee was not maintaining day-to-day stock register regarding various items of raw material purchased and consumed. He, therefore, invoked the provisions of s. 145(2) of the Act and applied enhanced gross profit rate of 20 per cent which was confirmed by the CIT(A). 5. The learned authorised representative explained that the purchases and sales are fully vouched and verifiable as has been mentioned and admitted by the AO in the assessment order. The authorise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative relied upon the orders of the authorities below. 8. We have heard the rival submissions. We find that purchases and sales are fully vouched in this case. The sales are exclusively made to the Railway Department. Mere non-maintenance of stock register of purchase and consumption of raw material will not lead to invocation of the provisions of s. 145(2) of the Act. The AO cannot invoke the provisions of s. 145(1) or 145(2) of the Act on this basis alone. The AO should have pointed out any specific mistake or deficiency in the books of account. Without recording the finding that the profits and gains cannot be properly deduced from such books of account, correctness of book results cannot be challenged and the AO cannot resort to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has discussed the facts of the case in detail. It is necessary for the assessee to prove prima facie the transaction which results in a cash credit in the books of account. Such proof includes proof of identity of his creditor, capacity of such creditor to advance the money and, lastly, the genuineness of the transaction. These things must be proved prima facie by the assessee and only after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the Department. After having examined the facts of the case the AO concluded that the assessee could not prove the source of deposit by the persons. However, the learned authorised representative contended that the AO had not specifically asked either the cash c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of business. We find that the tours and travels were conducted for the purpose of business and the disallowance was made without pointing out any item of disallowable nature. The learned authorised representative has submitted a chart as required under r. 6D of the IT Rules. Therefore, the disallowance made by the AO and sustained by the CIT(A) of Rs. 20,000 is hereby deleted. 16. As regards the disallowance out of vehicle maintenance and telephone expenses, I find that the same has been disallowed by the AO and sustained by the CIT(A) after considering the reasonableness of the expenditure. Therefore, we decline to interfere with the order of the CIT(A). 17. Ground No. 8 has not been pressed. Hence, dismissed. Ground Nos. 9 and 10 are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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