N. K. AGRAWAL, J. M. : - (1.) THESE are two appeals by two assessees belonging to the same group and relating to the asst. yr. 1992-93. Since the two appeals raise a common question and the facts are also identical, these are being decided by this common order for the sake of convenience.
(2.) We shall first narrate the facts in each of the two cases. In ITA No. 870/Chd/1994, the assessee-firm, M/s Sarkaghat Wine Traders, consisting of seven partners, was engaged in the business of purchase and sale of country liquor and English wine. Return of income was filed declaring total income at Rs. 1,58,836. Accounting year ended on 31st March, 1992. The assessee-firm had three licences, one relating to the Indian made foreign liquor (L-2), the second for selling country liquor on wholesale basis (L-13) and the third one for selling country liquor at the retail liquor vends (L-14). The assessee purchased country liquor under L-13 licence from the distillery and, thereafter, the stock was transferred to self, as L-14 business. The following purchases and sales were disclosed : judgement_4457_tlit0_19950.htm The Assessing Officer (AO) noticed during the assessment proceedings that day-to-day sale vouchers as well as the sale register had not been maintained by the assessee. There was no day-to-day stock register. Certain figures were not reconciled in respect of the stock transferred from L-13 licensee business to L-14 licensee business. Therefore, s. 145(2) was held to be applicable. The AO took the view that the system adopted by the assessee in showing the sales was not authentic and depended on the sweet will of the salesman. Therefore, it was found that no reliance could be placed on the book version. The AO estimated the suppression of sales at Rs. 2 lakhs in respect of the sale of IMFL under L-2 licence and suppression of sales at Rs. 3 lakhs under L-14 licence. Another addition of Rs. 50,000 was made on account of suppression of peg sales.
(3.) THE assessee went in appeal with the plea that the additions had not been made for adequate reasons. THE CIT(A), however, took a different view on the ground that the income was assessable by applying the presumptive rate of profit as specified in s. 44AC of the Act. THE CIT (A) took the view that the assessee had maintained a combined trading and profit and loss account in connection with the business conducted under three different licences. She took the view that the net profit shown by the assessee at Rs. 1,55,831 against total sales of abut Rs. 3 crores was only too low a profit. This was a profit declared at 5%. She took the view that if the books were not complete and reliable, then s. 44AC was attracted. It was not possible to calculate the income in accordance with the provisions of ss. 28 to 43C of the IT Act. It was noticed that the details of salary paid by the assessee were not available because no salary register had been maintained and the salary was recorded on the last date of the accounting period. THEre were no vouchers in respect of the commission paid at Rs. 73,272. THE CIT(A), however, reduced the addition from Rs. 2 lakhs to Rs. 1,22,567 in respect of profit from business under L-2 licence. Addition was, however, enhanced from Rs. 3 lakhs to Rs. 15,70,590 in respect of sales under L-14 licence. It was further held that no separate addition was required to be made in respect of profit on peg sales on the ground that a higher income had been determined under L-2 and L-14 sales. THE CIT(A) applied the rate of 40% on the total sales made by the assessee under L-14 licence.;