9911796707
TMI Blog2002 (7) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, invoked the provisions of section 145 and applied gross profit rate of 10 per cent on estimated sales of Rs. 40,00,000 and, thus, made an addition of Rs. 1,62,835 the CIT(A) had estimated the sales at Rs. 3,00,000 and applied gross profit rate at 9 per cent, after considering the fact that gross profit rate shown at 8.3 per cent was low in this line of business. 3. The ld.AR made the following submissions : (i)The assessee is engaged in the kirana business both in wholesale and retail basis. (ii)The assessee has maintained books of account consisting of cash book, ledger, journal, bill book, vouchers which were produced during the course of assessment proceedings and were test checked by the AO; and (iii)The assessee is making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on no material and being an arbitrary figure should not have been upheld and at the same time the trading results as declared should have been accepted. 4. The ld. departmental representative relied upon the orders of the CIT(A). 5. We have considered the rival submissions. We find that the AO has not pointed out any specific defect regarding correctness or completeness of accounts as envisaged by sub-section (3) of section 145 of the Act. Even if it is conceded that application of provisions of section 145 was justified, the AO and the CIT(A) had not given any basis for applying the gross profit of 10 per cent and 9 percent respectively. In our opinion, the past history is the best guide to determine the reasonableness of gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated the sales at Rs. 3,21,232 (Rs. 2,94,708 1.09). Thus he enhanced the addition made by the AO by Rs. 26,524. 8. The ld. AR had made the following submission : (i)The CIT(A) has erred in not appreciating the argument that on stock shortage addition of gross profit alone can be made in the present case. The CIT(A) confirmed the entire addition of stock shortage and in addition to this he also enhanced the income of the assessee in appeal by the gross profit element on stock. (ii)It is categorical finding in the assessment order as well as the order of the appellate authority that the stock short is deemed to be sold by the assessee. Considering this aspect of the matter, addition of gross profit element can only be made; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k is found after physical verification, it means that source of investment in purchase (shortage of stock is fully explainable. Only addition of gross profit is to be made on sales of shortage of stock (purchase). We have already hold that the gross profit rate of 8.30% as declared by the assessee is reasonable on the basis of this, the gross profit on the sales of shortage of stock will come to Rs. 3,19,168 (Rs. 2,94,708 1.083) and after applying gross profit rate of 8.3% the gross profit comes to Rs. 26,490. Thus, the assessee gets a relief of Rs. 2,94,742 (Rs. 3,21,232 - 26,490). 10. Ground No. 8-Charging of interest under section 234A, 234B and 234C. The ld. AR contended that the ld. AO charged interest under section 234A, 234B, and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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