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TMI Blog2015 (2) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ases (Rs. 83,25,768/-); rejection - of the sum of Rs. 16,85,743/-, which had been added originally by the Assessing Officer (AO) on account of the gross profit rate adopted by him); and on the deletion of addition of Rs. 87,429/-, claimed by the assessee as expenses towards embroidery charges. Briefly, the facts are that the assessee - for assessment year (AY) 1996-97 - filed a return declaring its total income as Rs. 1,19,370/-. The assessment was selected for scrutiny. The AO rejected the assessee's books of account by invoking Section 145(2) and brought to tax a sum of Rs. 113,24,060/-. In doing so, the amounts inter alia of Rs. 83,25,768/- due to unaccounted purchases, Rs. 20,93,098/- - due to unrecorded sales and Rs. 87,429/- due to em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sense that at one stage, a claim was made that relevant books or inventories existed, but later, it was urged that the books had been destroyed. Given the nature and volume of transactions, submitted counsel for the revenue, the AO was justified in rejecting books of account and taking the total volume of transactions on the one hand and applying the GP rate of 25.14% in the circumstance of the case. 3. Counsel for the assessee contended that the appreciation of facts by the lower authorities is neither perverse nor unreasonable as to call for interference by this Court under Section 260A of the Income Tax Act. He pointed out the relevant portions of the CIT's order and stated that the said authority not only followed the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s plain sarees, dupattas or other textile and finishing material, which will be converted into finished product by way of dying, embroidery work by artisans, stones, zari etc. In our considered view the explanation of the assessee was based on practical facts of its business and the exact description of closing stock finished items could not be demonstrated by way of exact description in the purchase vouchers. This is simply so because assessee does not purchase finished items. This factual situation has been conversely assumed by the assessing officer to draw an adverse inference that unrecorded purchases are made by the assessee and unrecorded sales were also indulged in by assessee. The test check ratio is extrapolated and applied to ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; "17.6. Apropos the assessee's appeal - in our considered view assessee's books, as far as sales are concerned, do not call for any rejection of books. No iota of evidence has been brought on record to suggest any undisclosed sales and in the absence thereof merely because books of a/cs are rejected without justification, sales cannot be estimated. In our considered view the rejection of books of a/cs of the assessee is only on the basis of surmises and assumed discrepancies in the closing stock which has been reasonably explained by the assessee. No evidence what so ever indicating non recording of any purchase or sale in books of accounts is brou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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