2008 (4) TMI 728

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....firm and running the business of manufacturing and sale of Bidi with trademark as Nisar Biri Sikka No. 1. 3. For the assessment year 1993-94, the assessee had filed return showing income of Rs. 15,314. The disclosed sale of Bidi was at Rs. 75,18,825 and the gross profit rate was shown at Rs. 4,62,635 and the percentage of gross profit was 6.15 per cent. The Assessing Authority has accepted the sale figure but rejected the books of account after applying the provisions of section 145(1) of the Act and applied gross profit rate of 10.5 per cent, which was applied in the assessment year 1992-93 and made an addition towards extra profit at Rs. 3,27,490 The Commissioner of Income-tax (Appeals) allowed the appeal in part and reduced the gross ....

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....ng Counsel relied upon the order of Tribunal and submitted that since the payments were not verifiable, therefore, the provisions of section 145(1) of the Act is applicable. He further submitted that in the case of M/s. A.M. Mazdoor Biri Co. involved in the manufacturing of Biri higher gross profit rate had been applied while in the case of assessee gross profit rate at 8.5 per cent has been applied. 7. Having heard learned counsel for the parties we have gone through the impugned order and the order of the authorities below. 8. We are of the opinion that the rejection of books of account is not justified and based on irrelevant consideration. It is not in dispute that in the manufacturing of Biri there is involvement of labourers. Th....