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TMI Blog2006 (11) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... d in upholding the order of the Assessing Officer as well as the Commissioner of Income-tax, rejecting the books of account and applying section 145(3) of the Act ibid, to determine the total income of the assessee ? (ii) Whether the estimate of the profit despite the assessee maintaining regular accounts for business duly audited by chartered accountant was justified ? (iii) Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal is justified in upholding the order of the Commissioner of Income-tax applying a gross profit rate of 5.5 per cent. on the sales made to the Government/semi-Government agencies, against the returned gross profit rate of 3 per cent. and without referring any comparati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 50.74 lakhs. (iv) Comparable sales were of the gross profit rate on 13.15 per cent. 3. The Assessing Officer disallowed telephone expenses to the extent of Rs. 5,000 for personal use in the business record ; the sum of Rs. 15,000 out of claim towards labour charges Rs. 8,254 (25 per cent.) out of car expenses and Rs. 4,000 out of claim for miscellaneous expenses since the assessee did not have the record. 4. On appeal, the Commissioner of Income-tax (Appeals) partly accepted the claim of the assessee by reducing the gross profit rate from 10 per cent. to 8.53 per cent. for trading turnover and from 6.5 per cent. to 5.5 per cent. on sale of wooden crates apart from relief of Rs. 5,000 each in the matter of disallowance of labour charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 STC 257 (Karn) (4) Mani and Co v. CIT [1995] 213 ITR 563 (Ker) (5) Joseph Thomas and Bros. v. CIT [1968] 68 ITR 796 (Ker). (6) Tara Chand Hari Ram v. Sales Tax Tribunal [1972] 30 STC 342 (P&H). (7) CIT v. K. Y. Pilliah and sons [1967] 63 ITR 411 (SC). (8) Polisetti Subbaraidu and Co. v. CIT [1968] 69 ITR 738 (AP). 9. In St. Teresa's Oil Mills v. State of Kerala [1970] 76 ITR 365 (Ker), it was observed the accounts maintained in the course of business have to be accepted as correct unless the same were unreliable or incomplete. In the present case, the accounts having been found to be incomplete or not maintained, this judgment is not applicable. 10. In Jhandu Mal Tara Chand Rice Mills v. CIT [1969] 73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal [1972] 30 STC 342 (P&H), it was held that best judgment assessment could not be arbitrary. This judgment also has no application on the facts of the present case. 15. In CIT v. K. Y. Pilliah and sons [1967] 63 ITR 411 (SC), it was held that where the assessee did not furnish explanation why profit at normal rate was not earned, the estimate of gross profit was justified. The said judgment instead of supporting the case of the assessee, goes against him. 16. In Polisetti Subbaraidu and Co. v. CIT [1968] 69 ITR 738 (AP), it was held that rejection of books of account was not justified in the absence of data connecting comparable business with different method of manufacture adopted by the assessee. The judgment is not applicable t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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