1978 (7) TMI 120

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....f. It had also trading transactions in items like sugar, flour, soap and maize. On a total turnover of Rs. 22,76,842 gross profit of Rs. 1,225 was disclosed. For the preceding year the assessee disclosed gross profit of 2.5 per cent. the ITO went through the accounts in respect of which audited Balance Sheet and Profit and Loss Account were filed. According to the assessee, the average cost price of mustard seed was Rs. 1.72 per kg. whereas the average sale price of mustard oil and oil cake was Rs. 4 and o.50 paise per kg. respectively. Therefore, it was submitted that taking the ratio of production of mustard oil at 33 1/3 per cent the assessee could not make any profits. It was shown further that 3 kg. of mustard seeds cost Rs. 5.16 and m....

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....'s order referred to by the ITO was set aside by the Tribunal. It has also been pointed out to us that the assessee's accounts for the asst. yrs.s 1966-67 and 1968-69 were accepted by the ITO and that the accounts of the assessee for all these years including the instant year were audited. Learned counsel also submits that the mill was in operation only upto the asst. yrs. 1968-69 and thereafter it was leased out to M/s. General Trading Corporation w.e.f. 16th Dec., 67. According to him the trading losses shown for the assessment year 1968-69 were accepted by the ITO. On the other hand, the Departmental Representative supports the ITO by pointing out the findings given by him in the relevant assessment order. 4. We have carefully gone th....

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.... there was a downward trend on the whole. Therefore, the gross profit adopted by the AAC at 2.5 per cent appear to be on the higher side. In our opinion, it would be reasonable to determine the rate of gross profit at 2 per cent. The ITO is, therefore, directed to allow appropriate relief to the assessee by working out gross profit at the rate of 2 per cent on the estimated turnover of Rs. 23 lakhs. 5. The remaining ground in the assessee's appeal relates to an addition of Rs. 25,000. The amount was included in the relevant assessment as the assessee's income form undisclosed sources because the latter failed to furnish any evidence as to the genuineness of the loan of Rs. 25,000 recorded as a credit in the name of M/s. Sanwarlal Singhan....