TMI Blog1995 (2) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of low G.P. rate. The Assessing Officer (AO), however, made the addition in respect of the surrendered income and also made addition on account of low G.P. rate. The assessee had shown sales at Rs. 8,10,225 and G.P. at Rs. 1,85,442 giving the G.P. rate at 22.89%. In the preceding assessment year, the assessee had shown a higher G.P. rate of 24.46%. Therefore, the AO applied the G.P. rate of 25% and made an addition of Rs. 17,090. It was noted by the AO that the assessee had not maintained any stock register nor a list of closing stock was furnished. 3. The assessee went in appeal with the plea that in the asst. yr. 1985-86, G.P. rate had been shown at 21% and in the next assessment year, namely, 1986-87, it was 22% only. Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shown in the immediately preceding assessment year but the rate was definitely higher as compared to the asst. yr. 1985-86 and 1986-87. The past history of the case cannot be totally ignored particularly when no specific defects have been found in the books of accounts. The learned counsel for the assessee has pointed out that it was not possible to keep a day-to-day stock register in view of the nature of the business. The business relating to timber did not permit the assessee to maintain a day-to-day stock register due to practical difficulties. We agree with the learned counsel that mere non-maintenance of a stock register was not sufficient to reject the G.P. rate shown by the assessee. Therefore, looking to the past history of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account by cheque and thereafter the money was deposited with the assessee firm through a bank draft. The depositor firm was also said to be a regular assessee under the IT Act. The assessee's plea was accepted in appeal. 9. The learned Departmental Representative has submitted that the genuineness of the transaction had not been properly explained because neither the depositor was produced nor the books of accounts of the depositor. The learned counsel for the assessee has, in reply, contended that the reason for not producing the depositor was a valid reason because the depositor firm did no more exist. Moreover, Arun Kumar, who happened to be a common partner, was produced before the AO and on confirmation of the deposit, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's plea was accepted. 12. The learned Departmental Representative has submitted that the expenditure was admittedly in respect of the interest relating to the earlier year and, therefore, could not be allowed in this year. The learned counsel for the assessee has, in reply, submitted that the very charging of interest by the bank in the year under appeal gave rise to a claim for deduction in the year under appeal. The assessee could not claim any deduction until and unless the bank had debited the assessee's account. Since a debit entry was made by the bank during the year under appeal, the expenditure arose only in this year and, therefore, the assessee could claim deduction only after the interest was charged. We are in agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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