9911796707
TMI Blog1969 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... rading sugar account extended to total sales of Rs. 33,93,351. The gross profits shown in the said account by the assessee was 1.69%. In its trading account there were cash sales of sugar from time to time totalling to an amount of Rs. 3 lakhs during the year and out of these sales, sales to the extent of about Rs. 2 lakhs were through a firm of brokers called "M/s. Mahashankar Ambalal & Co." Since the assessee had made sale transactions in cash, the Income-tax Officer proceeded to scrutinise the said transactions and obtain verification about their genuineness. He selected for that purpose cash sale transactions of the value of Rs. 75,016 effected through the firm of brokers on the 28th August, 1957, Sales of Rs. 16,090 out of the total sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addresses of the purchasers and, therefore held that the result shown by the assessee's account books in respect of the cash sale transactions could not be accepted. He, therefore, applied the proviso to section 13 to the case and added some additional profit by estimating the gross profits at 2 per cent. on the total sales in the trading account of the assessee. Accordingly, he made an addition of Rs. 31,440 to the gross profits as shown by the assessee's books of account. The assessee appealed to the Appellate Assistant Commissioner, who disagreed with the view taken by the Income-tax Officer and deleted the addition of the amount. Before the Appellate Assistant Commissioner the assessee produced the Sugar Market Reports for the months o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t lower rates, the Income-tax Officer was not justified in not accepting the book results as shown by the assessee and in applying the proviso to section 13 to the case. The Appellate Assistant Commissioner allowed the appeal of the assessee and deleted the addition of Rs. 31,440 made by the Income-tax Officer. In the further appeal to the Tribunal by the department, it allowed the department's appeal. According to the Tribunal, having regard to the facts of the case, the assessee had not proved the cash sales in its books and particularly the sales of Rs. 75,000 and odd recorded on 28th August, 1957, and the Income-tax Officer was, therefore, right in not accepting the trading results as per the books and proceeded on the application of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discard the book results. He, no doubt, pointed out that it appeared that other wholesale traders in the market had shown a higher gross profit of their turnover but it appears that no explanation had been called for from the assessee in that connection by any questions having been specifically put to him in that connection. The Income-tax Officer had scrutinised closely the account books of the assessee and had found no fault with them excepting that the addresses of the customers for the cash sales of sugar had not been entered. It was not found by him that there were any other reasons for not accepting the said cash sales, such as, for instance, the sales being at lower rates than what were prevailing in the market or that they were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odd was effected by the assessee, there might have been an occasion for the assessee to take advantage of the situation caused by the scarcity of sugar. Assuming that scarcity of sugar sometimes occurs just before the new crushing season starts in October, no such scarcity had occurred at the material time in the present case as is obvious from the Sugar Market Reports produced by the assessee, which show that the demand for sugar was slack and the rates in the market were declining. According to the Tribunal, although the entries in the account books of the assessee appeared to be all right ostensibly, the assessee could not merely rely on the said entries but had further to show that the transactions as entered in these accounts were true ..... X X X X Extracts X X X X X X X X Extracts X X X X
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