9911796707
TMI Blog1964 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed in comparison with the earlier years were too low and there were no day-to-day stock details for the purpose of verification. Another factor which he took into consideration was the ridiculously small withdrawals for personal expenditure in the partners' accounts. Shri R. S. Sanghvi had only withdrawn Rs. 6,900 and Shri C. T. Shah had only withdrawn Rs. 6,300. The assessee appealed to the Appellate Assistant Commissioner, who by his order dated October 16, 1958, accepted the appeal and deleted the addition of Rs. 75,000, but as the closing stock of Eveready torches was under-valued to the tune of Rs. 4,490, he only allowed a reduction of Rs. 70,510. He accepted the contention urged on behalf of the assessee that in view of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were doing business in the main on a wholesale basis there should have been no difficulty in tallying quantities in respect of major items of the trading account. In the absence of such a tally, the fall in the margin of profits cannot be satisfactorily explained by a proper analysis of the trading account. The fall in the margin is all the more difficult to explain in view of the fact that the respondents also had quota of imports worth about Rs. 8,00,000 which would have given them a handsome margin of profit. We are, therefore, satisfied that the proviso to section 13 was clearly applicable to the trading results in this case and having regard to the nature of business and the availability of imported materials the margin taken by the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and as such whether the Tribunal was wrong in restoring the addition and the addition should, therefore, be deleted from the assessment. " He urged that the proviso to section 13 could not be applied in the circumstances of this case. He said that in substance only two grounds had been taken for applying the proviso, namely, (1) that the appellant maintained no stock register, and (2) that the profits of the year were low in comparison with the previous years. He stated that these circumstances can never, as a matter of law, attract the applicability of the proviso. In this connection, he placed reliance on the decision of the Lahore High Court in Pioneer Sports Ltd. v. Commissioner of Income-tax. In that case, the Lahore High Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer to look into the accounts more carefully and see whether there is material to lead him to the conclusion that there is something false in the accounts. It further held that the fact that there is no stock register only cautions him against the paucity of return made by the assessee. It will be noticed that the Income-tax Officer, in this case, had not noticed any falling of the rate of profits disclosed in comparison with the previous years ; he had only noticed the lowness of profits. In our view this decision has no application to the facts of this case. What we have to see is whether the finding of the Appellate Tribunal that the income, profits and gains cannot properly be deduced from the method of accounting employed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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