9911796707
TMI Blog2003 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... und that there were credit sales which were not reflected in the books of account. The Assessing Officer on scrutiny of the regular books of account maintained by the assessee being dissatisfied rejected the same and added a sum of Rs. 8,19,255 towards the sales profit of the assessee. The said order was contested by the assessee in the backdrop that the sales were fully recorded and the assessee was following a system of recording the credit sales in the way as and when the credit sales were made, the assessee issued cash memos of sales and the outstandings were recorded in the copy separately. The Commissioner of Income-tax (Appeals) came to the conclusion that the entire credit sales could not have been included in the total income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od which was adopted by the assessee was not acceptable and, therefore, no benefit should have been conferred on him and such conferment amounts to perversity of approach. Per contra, Mr. G.N. Purohit, learned counsel for the assessee, has contended that when there is undisclosed income, the entire income cannot be put in the compartment of undisclosed income but a net profit rate has to be applied and once a net profit rate is applied, it cannot be said that there is perversity of approach. To buttress his submission, he has commended to us the decision rendered in the case of CIT v. President Industries [2002] 258 ITR 654 (Guj). On appreciating the rival submissions raised at the Bar, we have carefully perused the order passed by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the negative. The record goes to show that there is no finding nor any material has been referred about the suppression of investment in acquiring the goods which have been found subject of undisclosed sales." We are in respectful agreement with the aforesaid opinion inasmuch as the total sale cannot be regarded as the profit of the assessee. The net profit rate has to be adopted and once a net profit rate is adopted, it cannot be said that there is perversity of approach. Whether the rate is low or high, it would depend upon the facts of each case. In the present case net profit rate of five per cent. has been applied. We do not think it appropriate that the same requires to be enhanced. We are also inclined to think that it is high. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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