9911796707
TMI Blog2013 (4) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of trading in spectacle, frames, sun glasses and lenses. A survey u/s 133A of the Income Tax Act, 1961 (the Act) was carried out in the business premises of the assesse on 17-1-2002 during the course of which certain discrepancies in stock etc. were found. In a statement recorded during the course of survey, the assessee agreed to offer additional income of ₹ 8 lacs on account of excess stock found. Thereafter the return of income for the year under consideration was filed by the assessee on 31-10-2002 declaring total income of ₹ 14,244/-. In the assessment originally completed u/s 143(3) of the Act vide order dtd 27-12-2004, the total income of the assessee was determined by the A.O. at the same figure of ₹ 14,244 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 850/-. Although the assessee made an attempt to explain that the said frames sold at low rates were defective/damaged, it could not produce any documentary evidence to support and substantiate the said explanation. The A.O. also could not verify this explanation of the assessee as the frames were sold in cash and the complete details of names and addresses of purchasers were not available. He therefore rejected the explanation of the assessee as regards the sale of frames at ridiculously low rates during the post survey period and keeping in view the said defects as well as other defects pointed out by him in the assessment order including the discrepancies in stocks found during the course of survey, the A.O. rejected the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and partly allowed the appeal of the assessee. Still aggrieved, the assessee has preferred this appeal before the Tribunal challenging the trading addition made by the A.O. and confirmed by the ld. CIT(A). 4. The ld. counsel for the assessee, at the outset, invited our attention to the trading account and P L account for the pre and post survey period placed at page No. 40 to 43 of the assessee s paper book to show that the excess stock of ₹ 8 lacs accepted by the assessee during the course of survey was duly declared as additional income and there was no case of nullifying the said declaration as alleged by the Revenue authorities. He submitted that there was actually a loss of ₹ 2.68 lacs incurred by the assessee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration as compared to 0.15% of total sales in the immediately preceding year. 5. The ld. D.R., on the other hand, submitted that the provisional trading account was prepared and furnished by the assessee during the course of survey showing therein the gross profit at 35.26%. He submitted that nowhere during the course of survey it was even indicated by the assessee that the GP rate during the year under consideration has come down. He submitted that in the return of income, the assessee however declared a low GP rate of 20% for which no satisfactory explanation could be offered by him. He invited our attention to para No. 8 to 11 of the assessment order to show that specific defects were pointed out by the A.O. in the books of account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the ld. CIT in his order u/s 263 of the Act and found on such verification that the GP rate declared by the assessee for the year under consideration at 20.35% was very low as compared to the GP rate of 34.73% declared in the immediately preceding year. As noted by him, the GP rate for the post survey period was particularly very low and it was mainly as a result of sale of frames by the assessee at a very low rate ranging to ₹ 6 to ₹ 10/- as against their cost ranging from ₹ 650 to ₹ 850/- per frame. Although the assessee tried to explain that the frames so sold were defective and damaged, it could not support and substantiate the said explanation by producing the relevant documentary evidence. Even the A.O. c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er defects pointed out by the A.O. in the assessment order coupled with the fact that there was a drastic fall in the GP rate in the year under consideration as compared to the immediately preceding year which the assessee failed to explain fully justified the rejection of books of account of the assessee by the A.O. and estimation of the income of the assessee by applying the higher GP rate. As regards the GP rate applied by the A.O., it is observed that the GP rate of 34.73% was declared by the assessee for the immediately preceding year and since there was some agency commission income received in that year affecting the GP rate as pointed out by the assessee, the A.O. excluded the agency commission and adopted a low GP rate of 30.40% to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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