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TMI Blog2008 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... e and style Studio Saket dealing in photographic films and still photography. During the impugned assessment year, the Assessee had declared its gross profit at 1.5% on the sale of photographic films at Rs.8,98,56,016 to its registered dealers. 3. During the course of assessment proceedings, the Assessing Officer issued summons under Section 131 of the Income Tax Act, 1961 (for short as 'Act') to the aforesaid registered dealers to whom the sales were made requiring them to appear along with the books of accounts, supporting bills, vouchers, bank pass books etc., but the summons received back unserved as the respective parties were not in existence at the given addresses. The Assessee was, therefore, asked to produce thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts and estimated the Gross Profit rate of 10% of turnover resulting into an addition of Rs.75,32,104/-. 8. The Assessee preferred appeal before the Commissioner of Income Tax (Appeals) [for short as CIT(A)]. The CIT(A) re-examined the issue in the light of these facts and material available on record and arrived at a conclusion that the Assessee had declared the Gross Profit rate at 4.3% for the first 11 months of the accounting year and for the month of March, 1992 the gross profit was declared to 1.5% for which no justification was furnished. He, therefore, re-estimated the Gross Profit rate at 5% for the entire year and re-determined the Gross Profit at Rs.44,42,575/- resulting into an addition of Rs.30,80,502/-. 9.&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the traders. In such circumstances, the Assessee cannot be absolved of the obligation to furnish a confirmed copy of the customer's account or to produce the clients for verification of the transactions. The Assessee had received huge cash advanced from the customers and had also supplied goods on credit. The registered dealers were not produced for verification despite sufficient opportunities granted to the Assessee by the Assessing Officer. 12. The Assessee had contended before the Tribunal that he had sold at lesser rates than, the price fixed by the manufacture but no evidence to this effect was filed. The Tribunal also held that:-"In case of short supply there is always a possibility of sale of material at certain premium. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the turnover achieved, and many others. It is for the Assessee to explain the fall, if it so happens, and to substantiate his reasons. On the estimation of profit, for the eleven months of the accounting year the Assessee has declared a Gross Profit rate of 4.3% and for the month of March it has gone down to 1.5%. No plausible reasons had been furnished. No doubt, after rejection of books of accounts, the Assessing officer has to estimate the net profit on the basis of the material available on record, but has no right to estimate it exorbitantly. The CIT(A) estimated the Gross Profit rate at 5% for the entire year keeping in view the Gross Profit rate for the 11 months and hence no un-reasonableness in this estimation. 15. The Tribunal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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