2009 (12) TMI 992

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..... ord. 3. Brief facts of the case are that the assessee filed return of income declaring total income of ₹ 44,698/-. Copy of audited balance sheet and profit loss account was filed along with the return of income. The assessee is engaged in the business of trading of rough and polished di0amonds. During the year under consideration, the assessee has shown total sales at ₹ 3,19,67,923/- with gross profit of 0.49% as against total sales and gross profit of ₹ 5,01,80,990/- and 0.79% respectively shown in the earlier year of the assessment. As regards small suppressed sales and profit, the assessee submitted that in the preceding assessment year 2002-03, the gross profit rate of 1.50% was applied which is confirmed by the T .....

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..... ssee have been accepted. He has submitted that once books of accounts of the assessee are not reliable and rejected u/s 145 of the Income Tax Act, the proper course of action would have been applied for gross/net profit rate to determine the income of the assessee instead of making huge addition on account of unexplained purchases. He has submitted that without purchase, there could not be any sale made by the assessee. The learned Counsel for the assessee conceded that in the preceding assessment year 2002-03, the Tribunal confirmed the application of gross profit rate of 1.50% in the case of the assessee on rejection of the book results and submitted that same gross profit rate could be applied in the assessment year under consideration. .....

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..... ssee obtained the purchase bills. But it is highly unbelievable that without making any purchase, the assessee has made sale in ordinary course. In such circumstances, the AO has rightly rejected the book results of the assessee u/s 145 of the Income Tax Act and when book results are rejected, proper course of action should have been taken to determine the income of the assessee by considering nature of business of the assessee and the attending circumstances and previous history of the assessee. The assessee in the assessment year under appeal has shown gross profit rate of 0.49% and in the preceding assessment year he has shown gross profit rate of 0.79%. It is also admitted that in the preceding assessment year the gross profit rate was .....

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