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2008 (4) TMI 728 - HC - Income TaxDetermination of Gross profit percentage - Rejection of books of account u/s 145 - 2/3 Expenditure incurred on labour wages - Reopening the assessment u/s 148 - on the ground that in the assessment year 1992-93 the gross profit rate of 10.5 per cent was applied while the assessee has disclosed the gross profit of 6.69 per cent. Determination of Gross profit percentage - Rejection of books of account u/s 145 - 2/3 Expenditure incurred on labour wages - HELD THAT:- 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. The labourers are normally illiterate, as observed by the Tribunal and 2/3rd amount of the expenditure were incurred in the payment of labours wages. In these circumstances, the preparation of self made vouchers by the assessee cannot be said to be against the trade practice and method of accountancy. The assessee had no other option but to prepare self made vouchers to prove the expenditure incurred for the payment of labour wages. It is claimed by the assessee that in the vouchers the name and address of the labours, the amount paid, the date etc. were mentioned. The signature of the labourers or thumb impression have been obtained. No case has been made out by the revenue that the vouchers were bogus and the amount has not been paid. The labourers have not been examined. In these circumstances, it cannot be said that the payments were not verifiable. Thus, we are of the view that the rejection of books of account is wholly unjustified. The books of account is accordingly accepted and addition in this regard is deleted. Reopening the assessment u/s 148 - on the ground that in the assessment year 1992-93 the gross profit rate of 10.5 per cent was applied while the assessee has disclosed the gross profit of 6.69 per cent - HELD THAT:- We are of the view that the order of Tribunal is vitiated and liable to be set aside. The case is remanded back to the Tribunal to decide the appeal afresh and adjudicate the fundamental question namely, "Whether on the facts and circumstances of the case, the reopening of the case for the assessment year 1994-95 was justified?" In the result, both the appeals are allowed as stated above. For the AY 1994-95 the matter is remanded back to the Tribunal to decide the appeal afresh in the light of observation made.
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