9911796707
TMI Blog2012 (12) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... , when her appeal was called out for hearing. The assessee has, instead filed written submissions (WS), requesting for their consideration in disposing her appeal. The hearing was accordingly proceeded with by hearing the ld. Departmental Representative (D.R.) in the matter. The appeal raises three issues, each of which we shall take up in seriatim. 3. The first issue is qua trading addition pressed vide Ground No. 1. The assessee, an individual, is a whole-sale dealer in cloth. The book results disclosed a gross profit (G.P.) rate of 4.47% on a turnover of Rs. 472.05 lacs, as against a G.P. rate of 4.46% for the immediately preceding year, even as the turnover had witnessed an increase by Rs. 27.29 lacs. The assessee was found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nference could be made on the basis of such an exercise. Our first observation in the matter is that the very fact that both the AO as well as the assessee herself could determine the G.P. rate with reference to the specific purchases, itself negate the assessee's claim that it is not possible to maintain a stock register; that being one of the functions that the stock register fulfills. The stock record is a vital component of the assessee's books of account; in the absence of which it is not possible to deduce the correct profits there-from. How would assessee then place reliance on its books of account for determining its profits? There is no law that the books of account cannot be rejected in the absence of a stock register. True, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 4.75%, i.e., lower than the minimum rate as found by him, and which stands further pruned down by the ld CIT(A), yielding a G.P. rate of 4.68%. Accordingly we find no substance in assessee's assailment of the adopted trading results of 4.68%, as against a disclosed rate of 4.47%. The argument that the g.p. rate has been determined by hand picking some bills is false; we having already clarified that the actual g.p. rate based on these bills, which we, in the absence of any charge, presume to be at random, to be at 6.61% and, in fact, higher - in the range of 7% to 8%, if the actual, weighted results were to be adopted. As regards the details being now submitted by the assessee, the same firstly are not a part of the record, for us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention that the assessee had also at the same time obtained unsecured loans at Rs. 38.00 lacs from M/s. Agarwal Saree Sadan @ 5% per annum. He, therefore, restricted the disallowance as made by the AO to the amount worked out by applying the rate of 5% p.a. on the said diverted funds of Rs. 21.41 lacs. Aggrieved, the assessee is in appeal. 6. We have heard the party before us, and perused the material on record. The matter is again purely factual, i.e., whether the assessee's borrowed funds have been used, i.e., in part, for purposes other than business purposes. The assessee relies on the commercial expediency of its loan to M/s. M.P. Food Products, relying on the decision of honb'le apex court in the case of S.A. Builders Ltd. v. CIT (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds, which is what interest essentially is, toward the valuation of the services rendered by the assessee's grandson to her concern, which would therefore, i.e., for that reason, need to be substantiated. Would that, one may ask, entitle or authorize him to divert the business funds of the assessee's concern to his proprietary concern, and that too, free of interest? Business in family concerns in India is no doubt managed by one or more of the members of the family, so that there is nothing unusual about what the asseessee says, and which may well be true. However, what is unusual and not acceptable as a proposition is the argument to treat the said diversion of funds as for business purposes, so that where sourced from borrowed capital, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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