TMI Blog1969 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of which is dealing in sugar on wholesale and commission basis. It makes large purchases from sugar mills known as Simbholi Sugar Mills Ltd., Simbholi, and gets 2 per cent. commission on the sales of sugar pertaining to such purchases. It also purchases sugar from other sources. In the account year of the assessee ended 31st August, 1957, its trading sugar account extended to total sales of Rs. 33,93,351. The gross profits shown in the said account by the assessee was 1.69%. In its trading account there were cash sales of sugar from time to time totalling to an amount of Rs. 3 lakhs during the year and out of these sales, sales to the extent of about Rs. 2 lakhs were through a firm of brokers called "M/s. Mahashankar Ambalal Co." Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o practice to enter in those books the addresses of the customers. He stated that he only brought the purchasers in contact with the sellers and the delivery of the goods from the seller was taken directly by the purchasers. The Income-tax Officer did not accept the explanation given by the assessee and the broker for their inability to supply the addresses of the purchasers and, therefore held that the result shown by the assessee's account books in respect of the cash sale transactions could not be accepted. He, therefore, applied the proviso to section 13 to the case and added some additional profit by estimating the gross profits at 2 per cent. on the total sales in the trading account of the assessee. Accordingly, he made an addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other sales effected by the assessee. The Appellate Assistant Commissioner accepted these contentions of the assessee and held that having regard to the fact that the Income-tax Officer has not found that any sales have been suppressed from or omitted to be shown in the accounts by the assessee or that they have been shown to have been made at lower rates, the Income-tax Officer was not justified in not accepting the book results as shown by the assessee and in applying the proviso to section 13 to the case. The Appellate Assistant Commissioner allowed the appeal of the assessee and deleted the addition of Rs. 31,440 made by the Income-tax Officer. In the further appeal to the Tribunal by the department, it allowed the department's app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the cash sales entered in the books of account of the assessee the assessee was unable to supply the addresses of the customers to whom sugar was sold. The assessee had supplied an explanation for his inability to do so, but the said explanation was not accepted by the Income-tax Officer. There was no other reason for the Income-tax Officer to discard the book results. He, no doubt, pointed out that it appeared that other wholesale traders in the market had shown a higher gross profit of their turnover but it appears that no explanation had been called for from the assessee in that connection by any questions having been specifically put to him in that connection. The Income-tax Officer had scrutinised closely the account books of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain surmises and conjectures. It has referred to what it calls a matter of common knowledge that there is scarcity of sugar in certain months of the year and particularly in the months just before the new crushing season starts, which is in the month of October. Therefore, in the month of August, when the sale of sugar to the tune of Rs. 75,000 and odd was effected by the assessee, there might have been an occasion for the assessee to take advantage of the situation caused by the scarcity of sugar. Assuming that scarcity of sugar sometimes occurs just before the new crushing season starts in October, no such scarcity had occurred at the material time in the present case as is obvious from the Sugar Market Reports produced by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the transactions and the manner in which they had been effected, there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. The Tribunal, therefore, was not right, in our opinion, in setting aside the order of the Appellate Assistant Commissioner and restoring that of the Income-tax Officer. There are no circumstances disclosed in the case nor is there any evidence or material on record which would justify the rejection of the book results. In the result, therefore, our answers to the questions are as f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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