9911796707
TMI Blog1978 (4) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... 186(2) of the IT Act, The AAC has upheld the order of the Income-tax Officer regarding the cancellation of continuation of registration but allowed some relief to the assessee in quantum. Whereas the assessee has filed appeals against the cancellation of registration as well as the maintenance of a part of addition to the quantum of income, the Department has appealed against the relief allowed by the AAC. All these appeals are being disposed of by this common order. 2. Taking the assessee's appeal regarding cancellation of registration the facts are that the Income-tax Officer found that there was a declaration under s. 184(7) of the Act but he also found that there was on the part of the firm a failure to comply with the notices issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment, the Income-tax Officer issued a notice to the assessee that in view of non-compliance, he proposed to complete the assessment ex-parte and to take action under s. 186(2) of the IT Act. The Income-tax Officer recorded in the order sheet on 29th Oct., 1975 that the assessee had to explain why his registration should not be cancelled under s. 186(2) for the non-compliance of the notices. The case was fixed on 29th Oct., 1975, but nobody appeared on that date and no profit and loss account, manufacturing account or balance sheet in support of the return was furnished. Another opportunity was given and the case was fixed for 5th March, 1976, when again there was no compliance and the assessment was completed by the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er were not valid and it was not necessary for the Income-tax Officer to be satisfied about the distribution of profit before continuing the registration of the firm. 6. The Departmental Representative on the other hand submitted that the assessee had not only non-complied with the notices issued by the Income-tax Officer, but had never pleaded that the books of accounts were not in his possession or there was any particular difficulty in producing those books. He pointed out that even in the petition under s. 146, the assessee did not plead that the books were not in his possession. In view of this non-production of books even after giving repeated opportunities, it has to be held & deliberate default on the part of the assessee. He also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer should use his discretion in not cancelling the registration. In this case, however, the learned counsel for the assessee was not in a position to place before us any material which could indicate that there were any extenuating circumstances which could result in taking a lenient view regarding the cancellation of registration. We find that the assessee has not at all cared to reply to the show cause notice and from his subsequent conduct it does not appear that the earlier non-compliance was merely accidental. It has never been the case of the assessee that the books were not in his possession or the books were not maintained. Even before the AAC, no effort was made to produce the books of accounts. In these circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee was taken at Rs. 1,94,270 as against the total Income disclosed at Rs. 88,560. 10. When the matter came before the AAC, he considered the estimates made by the Income-tax Officer on the high side and considering the circumstances of the case, he estimated the sales of coal at Rs. 13,25,000 in place of Rs. 13,76,287 estimated by the Income-tax Officer. On these sales he estimated the net profit at Rs. 1 lakh which worked out to roughly 7.5per cent on the reduced turnover. In respect of the additions made in the short coke production account, the AAC accepted the plea of the assessee that when the estimates were being made on the basis that there was no account, it was not proper to add the value of shortage as the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and we are of the view that in this case some reasonable estimate had to be made considering the past history and the materials available on the basis of the bill books etc. Though the bill books cannot be considered exhaustive of all the transaction, they did indicate the extent of transaction to a substantial degree. We also find that the extent of profit at 10per cent had hardly any basis, whereas, the AAC had given some basis for taking the profit at 7.5per cent. Considering all the circumstances, the estimates made by the AAC appears to be reasonable and do not call for any interference. As regards the addition made in the coke shortage account, we agree with the AAC that the value of short production could not be added when the total ..... X X X X Extracts X X X X X X X X Extracts X X X X
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