1990 PLP (Trib (PTD)

MIAN ABDUL KHALIQ (JUDICIAL MEMBER).‑‑In these two further appeals relating to assessment years 1983‑84 and 1984‑85, the assessee, a Private Limited Company, derived income from manufacture and sale of MS Bars and ingots. G.P. rates of 5.18% and 4.82% were shown on recorded turn over at Rs. 5,02,06,235 and Rs. 6,24,39,

733. The I.T.O. pointed out various defects in the assessee's accounts in the form of un-verifiability of sales, un-vouched purchases, excessive wastage, etc. Instances of un-verifiability were pointed out and on the issue of excessive wastage, the I.T.O. confronted the assessee with parallel case existing at N.T.N. 07‑07‑1721651. Therein wastage was claimed/allowed at 6.33% as against 10.85% and 10.80% claimed by the assessee for the respective years under review. When confronted with these defects the assessee's AR vide order sheet entry dated 29‑5‑1986 did not contest the rejection of accounts before the I.T.O. for the first year under review. For the subsequent year, the I.T.O. specifically pointed out the defects as well as instances of un-verifiability and duly confronted the assessee with these defects. Thereafter, instead of applying G.P. rate to estimated sales, the I.T.O. felt contended in making round addition of Rs. 6,50,000 and Rs. 7,00,000 in the respective years under review. This treatment was maintained in appeal.

2. The first grievance of the assessee regarding rejection of accounts is untenable as for the first year rejection of accounts was not contested before the I.T.O. and for the subsequent year the defects pointed out by the assessing officer could not be demolished. Another aspect of the matter is that on similar pattern of accounts the assessee has history of rejection of accounts. The assessee's accounts were, thus, rightly rejected. The next grievance of the assessee was about excessiveness of the round additions made by the departmental officers. It was stated that in the immediately preceding assessment year 1982‑83 by an addition of Rs. 3,00,000 evolved G.P. rate at 3.16% being much lesser than declared version of the years under review, the additions as made by the departmental officers are unjustified. Be that as it may without entering into merits of the case, we are of the considered view that both the departmental officers were not justified in making round additions to the assessee's declared trading results. The established principle is that in an accounts case if the assessee's trading results are not acceptable, appropriate G.P. rate is to be applied to the estimated sales on the basis of material supplied by the assessee or procured by the I.T.O. In such like circumstances, G.P. rate shall be applied in accordance with the past history of the assessee of a regular assessment. In case no regular assessment is available G.P. rate of parallel cases of identical business of the same year is to be followed. In these circumstances, we vacate the impugned orders of the departmental officers for the years under review and remit the matter to the I.T.O. for de novo decision in the light of directions given above. The assessee's grievance regarding excessiveness of addbacks made under the head printing and stationery; postage, telephone and telegram; and staff welfare will also be re‑examined on the basis of details furnished by the assessee.

3. As a result of the above discussion, both the appeals filed at the instance of the assessee succeed to the extent indicated above. M.BA./888/T Order accordingly.