TaxTMI 
TaxTMI 
2011 (9) TMI 1267
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Government had declared a scheme of providing dhotis and sarees to the poor section of the society. The responsibility of procuring dhotis and sarees for the above scheme was entrusted to Tamil Nadu Textile Corporation (TNTC), which is a State Government undertaking. A number of suppliers rolled on the chain of activities that followed the above stated scheme. It is stated that later on, the scheme became a very big scam, whereby there were allegations of bogus purchases, malpractices and corruption. 3. In the above background a search was carried out by the Income-tax Department in the premises of TNTC. A number of consequential searches were also made by the department to cover those parties who had actively operated in the above sche....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessing authority completed the assessment under section 143(3) on 27-3-2006 fixing a total undisclosed income of Rs. 6,17,00,860/-. After considering the various submissions made by the assessee, the assessing authority allowed expenses to the extent o Rs. 3,08,50,430/- by way of deduction from the income determined in the original assessment of Rs. 9,25,51,290/- and consequently fixed the total income at Rs. 6,17,00,860/-. 8. The present appeal is against the above remand assessment order passed by the assessing authority. 9. Initially there was a dispute regarding the status of the assessee, whether an Association of Persons or not. There was also a dispute as to whether the assessment has to be completed substantively in the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the profit rate applicable to a business carried on in a normal situation. 11. Shri K. Ramasamy, the learned Senior Special Public Prosecutor appearing for the Union of India, contended that the rate of profit emerging out of the income determined by the assessing authority in the impugned remand assessment is only reasonable. The learned senior Public Prosecutor contended that every charge leveled against the assessee has been proved against it in the light of the evidences and materials collected by the Revenue in the course of various searches carried out in the premises of connected parties. The learned Public Prosecutor contended that this is not a business carried on by the assessee in the normal course, incurring normal and usua....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to that of a business carried on in normal circumstances. The profit rate of 2.5% disclosed by the assessee might be sometimes acceptable to a wholesale dealer carrying on the business in a lawful manner. That itself, we do not endorse as a finding of fact. It depends on various factors including the credibility of accounts maintained by the assessee. In the present case there is no such credibility to the working results declared by the assessee. The assessing authority has fairly admitted in the remand assessment order that the earlier profit rate of 120% adopted in the original assessment was definitely excessive, especially in the sale of uniform clothes. Therefore, the assessing authority was good enough to reduce such exorbitant rate....