1977 (1) TMI 75

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....54,140 metres, while in the books only 14,99,328 metres were admitted. This discrepancy is said to have been noticed with reference to the gate passes issued by the assessee firm, in respect of the printed cloth. The ITO found from the file of M/s. Chandra Printing Mills that the assessee did not bill for the above discrepant quantity. He observed that there were mis-calculations and errors in making the bills which resulted in excess charging in respect of 26,880 metres. He, therefore, held that in fact, there was omission to the tune of 10,060 rupees and added the same to the assessee's income, unders.27(1)(c)of the IT Act, 1961. The assessee replied by letter dated 5th Oct., 1974 and the material portion of the said reply reads as follow....

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....ferring to the delivery notes, prepared by us. Rarely the printed cloth is got back for reprocessing in which case another gate pass is issued while delivering the reprocessed cloth. The reprocessed cloth is not again billed, because the work done is only a rectification of the original work. The workmen inform the clerks of the cloth printed in relation to the delivery note. We were under the impression that by this system there would not be any omission in billing. However we now learnt that this system is not fool-proof". The ITO rejected the assessee's explanation and held that the assessee had furnished inaccurate particulars of income. He imposed penalty as aforesaid. On appeal, the AAC of Income-tax deleted the penalty for the rea....