2002 (8) TMI 278

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....s engaged in manufacturing and supply of diesel locomotive parts to the railways. Trading results compared to last two years are as under: Asst. yr. Sales (Lacs) Gross profit Percentage 1990-91 26.36 5.84 lacs 22.16% 1991-92 40.92 7.08 lacs 17.30% 1992-93 47.52 7.65 lacs 17.11% The AO pointed out that the assessee was not maintaining day-to-day stock register regarding various items of raw material purchased and consumed. He, therefore, invoked the provisions of s. 145(2) of the Act and applied enhanced gross profit rate of 20 per cent which was confirmed by the CIT(A). 5. The learned authorised representative explained that the purchases and sales are fully vouched and verifiable as has....

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....resentative relied upon the Tribunal's order. 7. The learned Departmental Representative relied upon the orders of the authorities below. 8. We have heard the rival submissions. We find that purchases and sales are fully vouched in this case. The sales are exclusively made to the Railway Department. Mere non-maintenance of stock register of purchase and consumption of raw material will not lead to invocation of the provisions of s. 145(2) of the Act. The AO cannot invoke the provisions of s. 145(1) or 145(2) of the Act on this basis alone. The AO should have pointed out any specific mistake or deficiency in the books of account. Without recording the finding that the profits and gains cannot be properly deduced from such books of acco....

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....18,000 - Baksuram 16,000 - Ramkishore 19,000 2,280 Ramchandra 19,000 2,280 Total 72,000 4,560 The AO has discussed the facts of the case in detail. It is necessary for the assessee to prove prima facie the transaction which results in a cash credit in the books of account. Such proof includes proof of identity of his creditor, capacity of such creditor to advance the money and, lastly, the genuineness of the transaction. These things must be proved prima facie by the assessee and only after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the Department. After having examined the facts of the case the AO concluded that the assessee could not prove the sour....