1. This appeal has been preferred u/s 260A of the Income Tax Act, 1961 (for short ""the Act"") proposing the following substantial questions of law
arising out of the order dated February 28, 2005 of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar passed in I. T. A. No. 548
(ASR)/1999 in respect of the assessment year 1993-94:
(i) Whether the Tribunal misdirected itself in law as well as on facts in recording its conclusion based on irrelevant findings and in ignoring
uncontroverted relevant material on record.
(ii) Whether on an application of the correct principles of law, was the Tribunal legally correct on the facts and in the circumstances of the case, in
upholding the order of the Assessing Officer whereby the latter had estimated the income from unaccounted sale by applying G.P. rate of 4.28 per
cent. as against the correct gross profit rate of 2.8 per cent. ?
(iii) Whether the impugned order passed by the Tribunal is perverse and a result of non-application of the mind ?
2. The assessee had filed return showing the income of Rs. 8,570 for the assessment year 1993-94, which was processed u/s 143(1)(a) of the
Act. During the search and seizure operation at the business premises of the assessee, certain incriminating documents were found and the case
was taken thereafter for scrutiny and notice u/s 148 of the Act was issued to the assessee.
3. The Assessing Officer made addition on account of unaccounted sale of rice as was found to be entered in the note book (annexure A-6). It
was also found entered in the note book that truck No. PBK-5177 and PCJ-5177 were used for sale of the rice and the said trucks belonged to
the assessee. The Assessing Officer examined the peak of the daily sale and on that basis calculated the profit. Another diary entry annexure A-7
was also found which contained entries in respect of the unexplained investment. The Commissioner of Income Tax (Appeals) while rejecting the
prayer for permitting the appeal to be withdrawn issued notice for enhancement and made further enhancement to the addition. On appeal, the
Tribunal upheld the order of the Commissioner of Income Tax (Appeals). The relevant findings recorded by the Tribunal are as under:
On consideration of the above facts, we are of the view that the authorities below rightly rejected the claim of the assessee. No evidence was filed
before the Assessing Officer or the Commissioner of Income Tax (Appeals) to show that the assessee was earning commission of 2 per cent. No
evidence of expenses made or claimed was filed before the authorities below. The Assessing Officer calculated the peak investment on a particular
date for which no explanation is filed by the assessee. The Assessing Officer did not make separate addition of Rs. 5,65,268 as the main addition
was made in a sum of Rs. 10,28,471. Therefore, the submission of the assessee is liable to be rejected. The assessee further claimed that G. P.
rate of 2.80 per cent. may be applied. Further this fact is not substantiated as the assessee failed to prove by any material that the assessee
incurred any expenses while earning income from the transaction outside the books of account. The Assessing Officer has taken a reasonable view
while framing the assessment in the matter. The Commissioner of Income Tax (Appeals) rightly enhanced the income as the Assessing Officer has
given the benefit of investment carried forward on wrong figure. It was not disputed by learned Counsel for the assessee. Considering the facts of
the case, we do not find any justification to interfere in the order of the Commissioner of Income Tax (Appeals). We confirmed the same and
dismiss this ground of appeal of the assessee.
4. Learned Counsel for the assessee-appellant submitted that the view taken by the Tribunal was perverse as expenditure incurred on generator,
bardana repair, freight inward and quality cut were not taken into account. The said expenditure had been incorporated in the books of account,
which were not rejected. The assessee had claimed the said deductions in the profit and loss account and not in the trading account, thus gross
profit was calculated without taking into account the said expenditure.
5. We are unable to accept the submission made. The books of account maintained by the assessee did not correctly reflect the transactions of
business and were inconsistent with the note book-annexure A-6 and diary entry annexure A-7, seized at the time of search. Expenditure in
question had already been claimed by the assessee. Having regard to the transactions found outside the books of account, the assessment was
made on the basis of the estimate. In such a situation some amount of guess work could not be ruled out. The view taken by the Tribunal cannot be
held to be perverse.
6. In view of the above, we do not find that any substantial question of law arises for consideration of this Court.
7. The appeal is dismissed.