1959 (2) TMI 27

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....taining the addition of Rs. 1,37,189." The assessee is a firm carrying on business in ground-nut kernel and manufacture and sale of ground-nut oil and cake at Guntur. The reference pertains to the assessment for the year 1947-48. The previous year was the calendar year 1946. In the year of account, the books disclosed a turnover of Rs. 18.18 lakhs and a gross profit of Rs. 92,726 which worked out to 5.1%. The net income disclosed by the assessee was Rs. 25,454. This figure, however, was not accepted by the Income-tax Officer who added four sums on account of the value of the yield of oil and cake from uncounted for kernel Rs. 34,795, the value of deficit yield of oil and cake from kernel disclosed in the books Rs. 46,001, unaccounted for....

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....t which is lower than 10 to 11 per cent. Disclosed by the merchants, in this line. We would accordingly confirm the additions. We might state at the end that although we discussed the above point in detail, in our opinion it was not necessary to consider minutely every one of the defects and every one of the additions in the view we have taken. They were discussed to exemplify the incorrect nature of the book version." The Tribunal was careful in it concluding sentences to emphasise that it is basing its computation on the estimate of 9.5% and not upon any of the items which were taken into account by the income-tax authorities. The scrutiny by the Tribunal of the items of additions made by the income-tax authorities was merely for the p....

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....total turnover of Rs. 18,18,308 works out to about 9.5%. The Appellate Assistant Commissioner has also computed these figures as showing a yield of 9.5%, gross profit, which is the gross profits in three other similar cases in Guntur. Having thus computed the gross profit at 9.5%, the Appellate Assistant Commissioner further added a sum of Rs. 56,345 on account of unaccounted for profit on sale of permits restricted to the unproved cash credits. This addition is obviously wrong when a flat rate of 9.5% on the total turnover is being adopted in computing there gross profits. The assessee had recourse to the several entries of cash credits only for the purposes of balancing the accounts with a view to reducing the rate of gross profits. If on....