TaxTMI 
TaxTMI 
1999 (9) TMI 127
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....w that income cannot be deducted from the records maintained and he accordingly applied provisions of s. 145(2). He noted that the stock maintained by assessee is more than the sales declared by the assessee in respective years. He also noted that assessee is a big retailer and sales shown are not properly shown. He was of the view that in peak months a sale of Rs. 5,000 was reported by the Inspector who was one of the members of the survey partly. He picked 4 months i.e. June, July, October and November as peak months of the business and other months were treated as lean months and in his view a sale of Rs. 4,500 would have been made by the assessee in peak months per day and a sale of Rs. 2,500 per day would have been made by the assessee in lean months. Accordingly he made his own estimation of sales which are as under. The sale figures declared by assessee is also shown as under: Asst. yr. Sales estimated by AO Sales declared by assessee Rs. Rs. 1986-87 8,11,154 5,85,016 1987-88 8,92,270 6,49,825 1988-89 9,81,500 6,79,265 1989-90 18,89,387 13,18,287 1990-91 11,60,623 8,56,200 1991-92 12,76,685 8,73,238 The gross profit (GP) rate shown by assessee ranging....
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....mplete. For example at ledger foil No. 94 the interest a/c shows only an amount of Rs. 13,939 whereas the details filed as per accounts of the partners available in the ledger shows interest expenses of Rs. 27,379. The insurance expenses of Rs. 2,632 is also not finding any place in the ledger. It is stated that the same is paid through bank. (iii) The salary ledger a/c shows entry of Rs. 32,081 including payments up to May, 1987. Entry for the month of June, 1987 is not made in the ledger a/c of salary but found entered in the salaried persons account. (iv) Vouchers of expenses of scooter expenses are found to be partly vouched. (v) No voucher of expenses for shop expenses, travelling expenses and insurance expenses are maintained. (vi) Balance sheet as on 30th June, 1987, shows cash balance of Rs. 4,130 but it has no basis. List of sundry debtors and trade creditors have not been filed. Thus it cannot be said that the balance sheet reflects the correct position. (vii) It is found that the assessee has shown the WDV of scooter as on 30th June, 1987, in the balance sheet at Rs. 12,000. The WDV for the last year was Rs. 2,272 and, therefore, the assessee was asked to produce th....
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....an be drawn. (xi) At the time of survey under s. 133A on 3rd July, 1986, the sales of the assessee per day was estimated by the Inspector at Rs. 5,000 per day in the months of June & July, 1986. As per the abstracts taken at the time of survey the average sales for the first 5 days of the month of July, 1986, was Rs. 2,800. But the sales shown for the asst. yr. 1988-89 is far less than the average detected in the first 5 days of the year which falls in the period relevant to the asst. yr. 1988-89. 4. After perusing these defects we are convinced that provisions of s. 145(2) are clearly applicable and the AO as we have already started (sic-stated), has rightly invoked. However, we are not convinced the observations of the AO in regard to enhancement in sales because he himself admitted that the assessee produced ledger of two types i.e. party ledger and expenses ledger, one common register containing particulars of purchases and sales. It was further observed by the AO that purchase vouchers and sale bills and vouchers of expenses were also produced. Nowhere the AO has observed that any sales or purchases were found which was not recorded in the sale or purchase register which adm....
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....e AO is, therefore, directed to accept the sales as declared by assessee. We do not find any weight in the contention of the learned authorised representative that the GP rate shown by assessee was a correct GP rate as we have already stated that on proper books of accounts were maintained. Therefore, GP rate applied by the AO was very much reasonable and accordingly we confirm the GP rate applied by the AO in all the assessment years involved here before us. For the sake of completeness, the estimation of sales are cancelled in all the years which are here before us and GP rate applied by the AO in all the years are confirmed which are here before us. We have seen the order of the AO in detail and we find that disallowance on account of various heads and on account of sister concern is also justified. We have noted that assessee could not explain that why he is doing the work of the sister concern. No mutual agreement was brought to our notice neither it was brought to the knowledge of the AO or of the CIT(A). By merely saying that they were handling the affairs of the sister concern and incurring expenses on behalf of them is not sufficient. The AO was very much reasonable who ri....