1988 (9) TMI 14

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....evied in the case of the assessee ?" The facts, shortly stated hereinafter are, that the assessee carried on business of printing, publishing and selling newspapers and periodicals known as Daily Basumati, Weekly Basumati and also some other periodicals. For the purpose of its business, the assessee-company purchased paper, ink and other miscellaneous materials. For the assessment year 1964-65, the assessee-company filed a return on October 20, 1964, disclosing a loss of Rs. 1,79,064. The Income-tax Officer rejected the book result of the assessee and completed the assessment on a total income of Rs. 89,085. The Income-tax Officer felt that the assessee must have inflated its purchases of paper and miscellaneous materials and disallowed Rs....

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....er levied the penalty merely on the basis of the reasons given by the Income-tax Officer in the assessment order for disallowing Rs. 1,50,000 from the purchase account towards possible inflation of purchases and for adding Rs. 1,00,000 in the trading account towards possible suppression of sales. It was only on estimate that the Income-tax Officer made the addition towards possible suppression of sales and disallowance towards possible inflation of purchases. We do not think that any inference of fraud or gross or wilful neglect on the part of the assessee could be drawn where additions towards possible suppression of sales or disallowances towards possible inflation of purchases were made in the trading account by the Income-tax Officer on....