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TMI Blog1988 (10) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... es to purchase from the company and the rates at which the purchases are to be effected. 3. The ITO in the course of assessment proceedings required the assessee to produce a copy of the agreement effective for the assessment year under consideration. The assessee expressed his inability to do so but furnished a copy of the agreement relevant for the period 1st April, 1981 onwards. It categorically stated that the terms of this agreement were absolutely identical to those for the period beginning 1st April, 1980 and this agreement should be considered for the purpose of the present assessment. 4. The ITO after perusing the agreement and making certain enquires from the assessee proceeded on the following lines; "Now, this agreement which is effective from 1st April, 1981 puts the various products of the Larsen & Toubro, in three categories. It specifies that the products of category 'A' (Motor starters and accessories) will be supplied at 0.8 per cent times the listed price and the minimum purchases of this category must be of value of Rs.16 lacs during the year. It was seen from the sale bills of the assessee that these products were sold to the customers by putting 9 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount were not reliable and that there were various mistake and short-comings in them. That there was no inflation in respect of the advertisement expenses and the nominal amount of Rs.114 spent on visit to Udaipur by one of the partners was for attending a Seminar and was related directly to the assessee's business. (4) The observations of the ITO pertaining to the non-co-operative attitude of the assessee were uncalled for on the facts of the case since there was regular compliance with the notices issued by the ITO from time to time as also the furnishing of information and details called for. (5) The assessee had submitted a detailed statement to the ITO showing billwise commission received from the company as also the rate of commission of every purchase from the company as well as the commission received from other traders from whom the goods had been purchased. (6) The assessee had also filed a detailed statement with the ITO showing billwise sales and the commission parted with in respect of each of these sales. (7) That the ITO had ignored the detailed statement filed with him and which gave the true position; it had chosen instead of to work out his own figures on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to him the ITO was fully justified in rejecting the assessee's trading results and in doing so had not only taken into account the variation vis-a-vis the agreement with M/s Larsen & Toubro Ltd., but also certain other defects and mistakes in its books of account pertaining to advertisement expenses and travelling expenses. In this respect he also referred to the decline in the Gross Profit rate as compared to the immediately preceding assessment year. The learned departmental representative also took exception to the detailed facts and figures given by the assessee to the CIT(A) for the first time with a view to justify its trading results. According to him the assessee had not furnished the particulars of the sales on which a lower Gross Profit rate had been earned to the ITO in the course of the assessment proceedings. At this stage he urged that the matter could be restored back with a view to given an opportunity to the ITO to peruse these details and give a finding thereafter. 10. The learned counsel for the assessee on the other hand strongly supported the order of the CIT(A). He in fact reiterated the arguments advanced before the CIT(A) and which we have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as also the other dealers. This aspect of the matter has not been touched by the ITO while finalising the assessment. In case he would have done so he would have found himself in a better position to decide whether the trading results of the assessee merited acceptance or not. 13. At this stage was would refer to the reconciliation statement as reproduced by the CIT(A) in his order and which finds place at pages 16 and 17 of the assessee's paper book. This is as under: . . . Commission . Rs. Rs. "20" % commission purchases from the company 14,63,192 2,89,984 Purchases at 15% commission from the company 2,83,918 42,407 Total purchases from the company 17,47,109 3,32,391 Purchases from other dealers 3,42,062 14,668 . 20,89,171 3,47,059 Less : Commission 3,47,059 . . 17,42,112 . Add : . . Sales tax charged by the company on ex-commission prices 95,571 Karajat charged by the company 3,381 . Karajat by other dealers 1,613 . . 1,00,565 . Net purchases 17,42,112 . . +1,00,565 . . =18,42,677 . Total sales 21,95,705 . Less : Commission paid to purchasers. 98,521 . . 20,97,184 . ITO counted 20% commission on 16,00,000 3,20,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITO in changing the entire system and that also without bringing any additional material on record. He has ignored the actual facts and figures and has chosen to dwell in the realm of suspicion, surmises and conjectures. As rightly pointed out by the CIT(A) he could have sought the necessary clarification directly from M/s Larsen & Toubro Ltd., with the explanation given by the assessee. 17. In the final analysis we confirm the order of the CIT(A) and reject the first ground in the Revenue's appeal. 18. The only other ground in this appeal pertains to the disallowance in respect of Jeep car expenses. The ITO disallowed 1/3rd viz., Rs. 10,040 out of the total claim of Rs. 30,120 on account of the personal user of the vehicle by the partners of the firm. 19. The CIT(A) however restricted the disallowance to 1/4th on the following lines: "The last ground of appeal is that the ITO should not have made addition of Rs. 10,000 out of Jeep expenses. The assessee has given the following reasons in writing: "The total sales are as under: Sundry account Rs. 3,88,594 L.& T.L.K. Goods Rs. 20,97,184 Electric Motors Rs. 38,284 . Rs. 25,22,062 & net returned income is o ..... 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