TMI Blog2000 (3) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. The assessee is a dealer in yarn and grey cloth on wholesale basis. The main business is of sale and purchase of yarn of five qualities being count Nos. 24,34,37,40 and 60. The assessee had disclosed profit of Rs. 17,05,714 against the total turn over of Rs. 14,23,45,713 giving G.P. rate of 1.19%. In respect of grey cloth, the assessee had shown profit of Rs. 7,068 against the turn over of Rs. 7,3 3,624 giving G.P. rate of 1.1%. The Assessing Officer considered such profits on lower side and the assessee was asked to explain the reasons for the same. The explanation of the assessee as quoted in the assessment order was as under: 'The sales and purchases are supported by bills. The assessee has kept stock register count-wise, date-wis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown by the assessee by invoking the provisions of section 145(1). Thereafter he referred to three transactions of purchases/sales effected by M/s N.H. Jakhotiya showing the G.P. rate of 596 and 696. But he applied G.P. rate of 396 on the turnover disclosed by the assessee and made an addition of Rs. 24,28,861 in the yam account and Rs. 13,941 in the account of grey cloth. For the similar reasons, the addition of Rs. 10,44,933 was made in the case of Raghuvir Patodia, the other assessee. 3. The matter was carried before the CIT(A) by both the assessees. It was contended before the CIT(A) that provisions of section 145(1) could not be applied considering the facts on record. According to the assessee, all the sales and purchases as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from 0.4% to 0.84%. Accordingly, the G.P. rate declared by the assessee in this year at 1.19% should not be disturbed. 4. After considering the arguments of the assessee as well as the defects pointed out by the Assessing Officer, it was held by him that provisions under section 145(1) were clearly applicable particularly when the addresses of purchasers as well as sellers were not available on the bills. However, on merits, he was of the view that G.P. rate of 3% could not be applied by the Assessing Officer in view of various facts viz, (1) the Assessing Officer had not taken into consideration average rate of G.P. for the whole year in the case of M/s. N.H. Jakhotiya which was shown at 1.31% and had merely picked up some three bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed on page 16 of the paper book. Therefore, finding of the CIT(A) that names and addresses of the sellers were not mentioned in the purchase vouchers is factually incorrect. Further it is not the case of the Assessing Officer or the CIT(A) that all the sale bills are without names and addresses of the parties. It is only in case of cash sale, the name and addresses of the purchasers were not written since the assessee was not interested in knowing their addresses. In this connection reliance was placed by him on the Bombay High Court judgment in R.B. Jessaram Fatehchand (Sugar Deptt.) v. CIT [1970] 75 ITR 33. Further the G.P. rate in this year was better than the rate in the preceding years. In view of these circumstances, it cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that such comparable cases were confronted or shown to the assessee. This point was specifically raised before the CIT(A) and there is no finding of the CIT(A) to the fact that such instances were confronted to the assessee by the Assessing Officer. Therefore there is a clear violation of the principles of natural justice and consequently those instances cannot be considered as admissible evidence/material as held by the Hon'ble Supreme Court in the case of Kishinchand Chellaram v. CIT [1980] 125 ITR 713. Respectfully following the aforesaid judgment of the Supreme Court, the 3 instances as quoted by the Assessing Officer in his order are hereby excluded from consideration. If such material is excluded then it cannot be said that profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of the assessee. It is also pertinent to note that in the course of assessment proceedings, the assessee had offered to prepare separate trading account count-wise, if a time of one month was granted to him. But surprisingly the said request has been turned down-by the Assessing Officer. Therefore, no fault can be found with the assessee in this regard. 8. The 3rd reason given by the Assessing Officer is that name and addresses of the customers are not given on the sale bills. The CIT(A) has given a finding that names and addresses are not given both in the purchase as well as sale bills. As far as the purchases are concerned, these are from well-known parties and list of such persons has been given in the paper book at page 16. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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