TaxTMI 
TaxTMI 
1999 (12) TMI 119
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; Rs. (i) Shri Ramesh Chandra 5,831 (ii) Shri Harish Chandra 6,176 (iii) Shri Manna Lal 5,011 (iv) Smt. Awanti Bal 3,036 (v) Shri Shanker Lal 1,874 (vi) Shri Devi Lal 2,274 (vii) Shri Khemraj &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Rs. 10,59,823 on which the assessee derived gross profit of only 5 per cent. This fact stated by the assessee is duly recorded in the assessment order. The AO has not brought any material in rebuttal of the aforestated facts. If the GP on sale of TVs is excluded from the GP, the GP rate on the remaining sales will come to more, than 10 per cent which is almost equal to the GP rate declared in the preceding year. As regards the other grounds mentioned by the AO that the assessee has not shown income by way of repair charges except a sum of Rs. 1,000 the learned counsel submitted that no income by way of repairing charges was earned by the assessee and, therefore, the question of showing any repairing income does not arise. No evidence exist on record to justify such an erroneous presumption by the AO. The learned counsel thus strongly urged that the addition made in the declared GP rate should be deleted. 4. The learned Departmental Representative submitted that the assessee had not produced any evidence to support his contention that GP rate of only 5 per cent was derived on sale of TVs. The corresponding purchase and sale invoices of the TV were not submitted before the Depar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... This GP rate on other items is thus better as compared to GP rate of 10.3 per cent declared in the preceding year. The AO has not pointed out any specific items of mistakes or discrepancies in the books of accounts. The entire purchases and sales are supported by vouchers and regular books of accounts. Mere absence of day-to-day stock register in the case of petty dealer who is dealing in hundreds of different items, cannot justify resort to estimation of profits, particularly when no mistakes or defects were found in the regular books of accounts provided by the assessee. We are, therefore, of the considered opinion that no addition could be sustained in the declared trading results. We, accordingly direct the AO to delete the addition of Rs. 64,532. 7. Next ground relates to confirmation of the disallowance of Rs. 26,616 out of interest paid to the various creditors, whose loans are stated to be old loans and they are stated to be close relatives of the assessee. 7.1. Shri Ranka, the learned counsel of the assessee, submitted that the balance outstanding in the loan account of the seven parties represent old loans. The amount of loans have been brought forward in the accou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roducing Smt. Awantibai before the AO. The AO has doubted her capacity without any valid basis whatsoever. He also drew our attention to the copy of her account placed at pp. 7 and 8 of the paper-book. Copy of her account for the year under consideration as well as for various subsequent years indicates that her loan was repaid by various cheques issued in the years 1990-91 and 1992-93. The details of repayment by cheques to Smt. Avantibai were also not brought to the notice of the AO or the CIT(A) as admitted by Shri Ranka during the course of hearing before us. 7.4. The 3rd deposit relates to Shri Harish Chandra. Shri Harish Chandra is the elder son of Shri Manna Lal Sutar and brother of Shri Ramesh Chandra. Since he could not be produced by the assessee, the AO issued summons and recorded the statements of Shri Harish Chandra. Shri Harish Chandra in his statement, as observed by the AO in the assessment order, stated that he does not have any knowledge about any deposit with the assessee, Shri Manohar Lal, P/o M/s Bharat Electric & Radio Engg. Works, in his name or his father's name or in the name of his brother and mother. Shri Harish Chandra was the partner in this business....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 30-1-1992 20,000 0875594 30-3-1992 20,000 0918200 2-9-1992 20,000 720802 3-9-1992 22,600 The account was squared up on 31st March, 1993, to Nil. The assessment for the year under consideration namely, asst. yr. 1989-90 was made on 31st Dec, 1990, in which the aforesaid contents from the statement of Shri Harish Chandra have been mentioned by the AO. The details of repayment of loan in the subsequent years in the case of Shri Harish Chandra had also not been brought to the notice of the AO or the CIT(A), as admitted by the learned counsel, Shri Ranka during the course of hearing. 7.5. Shri Ranka submitted that the remaining four creditors were not even summoned. The AO has not brought any material on record to show that the loan in the remaining four accounts was non-genuine. Hence, there is no justification for disallowing interest allowed to the remaining fou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wn credit balance in the account of Shri Harish Chandra as on close of the relevant year at Rs. 57,650. Interest of Rs. 6,176 was credited in his account which is part of the total interest claimed by the assessee. This statement of Shri Harish Chandra inter alia stating that nothing was receivable by him from the assessee by way of loan or deposit, must have been recorded by the AO before 31st Dec, 1990, when the assessment was completed. Thereafter the loan standing in the name of Shri Harish Chandra has been repaid by cheques the details of which have been given in earlier part of this order. The loan repaid along with interest aggregates to Rs. 82,600. Such repayments were made in the year 1992 by four different cheques. In order to ascertain the truth and veracity of the statement of Shri Harish Chandra or the truth and veracity of the credit balance shown in the loan account of Shri Harish Chandra by the assessee in his books of accounts, it is necessary to verify the facts of the loans having been repaid in the subsequent years by cheques. 10. Like the loan of Shri Harish Chandra, copies of accounts of all the seven depositors have been submitted in the compilation. Copie....