1981 (1) TMI 110

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....certain details including the rate of profit charged by the assessee from its sister concerns on the sale made by it. The assessee had explained circumstances in which it had earned a lower profit. The ITO, however, found that several other dealers doing similar business had disclosed much better gross profit. Considering the earlier history of the case the ITO worked out the income by applying a rate of 3.7 per cent and made an addition of Rs. 2,82,977. 2. When the appeal came before the CIT (A) various contentions were made before him. In order to arrive at a correct gross profit the CIT (A) called upon the assessee to file certain details including the amount of sales to sister concerns in indented sales and own sales. Profit or loss e....

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.... by the appellant to the sister concerns and to see whether it can be proved that the sale by the appellant firm to the sister concerns were sham transactions or otherwise Bone fide transactions governed by business considerations or otherwise. For this purpose, the ITO may make such enquiries as may be necessary namely to see whether the purchases by the sister concerns were immediately sold to outsiders or those were kept in stock over a period and then large profits earned by the sister concerns. It is admitted by the appellant that both the appellant firm as well as sister concerns are dealing in wholesale and if that is so it is really surprising that on the same sales the appellant firm has made a profit of 0.47 per cent only whereas ....

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....irections by making out a new case which was not the case of the ITO. He submitted that the details which had been furnished before him were sufficient for deciding the question of low gross profit and the CIT (A) instead of setting aside the assessment should have decided it himself. He further contended that the direction of the CIT (A) would prejudice the ITO as he would find bound by the findings of the CIT (A) on this question. 4. Having considered the facts of the case we are of the view that the set aside order passed by the CIT (A) was justified. Several relevant aspects of the matter had not be considered by the ITO though he had made substantial additions to the trading results. The ITO had noted the fact that substantial sales ....