TMI Blog2007 (7) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case and also no further deduction claimed in respect of the purchases by the assessee, no further disallowance could be made. When the GP rate is applied, that will take care of everything and there is no need for the AO to make scrutiny of the amount incurred on the purchases by the assessee. Taking note of the fact that the assessee is a tailor and is doing tailoring on job work basis and also he has not maintained the accounts and vouchers properly, the assessee had correctly and voluntarily offered the said amount for assessment. Applying the principle laid down in the case of CIT vs. Banwarilal Banshidhar [ 1997 (5) TMI 37 - ALLAHABAD HIGH COURT] , the Tribunal is right in its view that no disallowance could be made. So, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of law are as under : The assessee is an individual engaged in the job work of stitching of clothes for exporters. The relevant assessment year is 2001-02 and the corresponding accounting year ended on 31st March, 2001. The assessee filed his return of income on 9th Jan., 2002 admitting an income of ₹ 1,43,830. The return was processed on 16th Oct., 2002 determining a refund of ₹ 57,940. Later, the matter was taken up for scrutiny and notice under s. 143(2) of the IT Act ( Act in short) was served on the assessee on 21st Oct., 2002. The AO completed the assessment under s. 143(3) determining the total income at ₹ 7,15,550. While completing the assessment, the AO made additions and disallowance under s. 40A(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of 20 per cent on the sum of ₹ 15,30,060. The assessee offered no explanation for the same. With regard to applicability of s. 40A(3) of the Act, the assessee filed letters dt. 13th Aug., 2003 and 21st Aug., 2003 and pleaded that : (a) He had not maintained his accounts properly; (b) Bills and other evidences were misplaced at the time of shifting of his factory premises and that therefore (c) offering to accept an addition of ₹ 2,50,000 to buy peace with the Department and to avoid penal and prosecution proceedings. Hence, the AO made addition of ₹ 2,50,000 in the total income of the assessee. The assessee is a tailor and doing the job work and the percentage of profit cannot be fixed abnormally in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k basis and also he has not maintained the accounts and vouchers properly, the assessee had correctly and voluntarily offered the said amount for assessment. The Tribunal also relied on the Allahabad High Court judgment in the case of CIT vs. Banwarilal Banshidhar (1998) 148 CTR (All) 533: (1998) 229 ITR 229(All) wherein it was held as follows : The question for consideration is when no deduction was sought and allowed under s. 40A(3), was there any need to go into s. 40A(3) and r. 6DD(j). We see force in the view taken by the Tribunal that when the income of the assessee was computed applying the GP rate and when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of s. 40A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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