- (1.) Heard counsel for the parties.
(2.) The Income-tax Appellate Tribunal (Allahabad Bench), referred the following questions for the opinion of this court under Section 256(2) of the Income-tax Act, 1961 (briefly, "the Act") I "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that there was no question of any disallowance in a case where the assessee's income is computed by application of gross profit rate on sales as shown? (ii) Whether, on the facts and in the circumstances of the case, there was material before the Tribunal to hold that the assessee's case comes within the meaning of the exceptions contemplated in Rule 6DD of the Income-tax Rules, 1962 ? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in deleting the disallowance of Rs. 91,926 made by the Income-tax Officer under Section 40A(3) of the Income-tax Act, 1961 ?"
(3.) The assessee, a registered firm, derives income from sale of Ayurvedic medicines. The proceedings relate to the assessment year 1971-72. The assessee disclosed a gross profit rate of 11 per cent, in respect of sales both at the head office and in the branch office at Rs. 1,01,020 and Rs. 90,547, respectively, as against gross profit rate of 13 per cent, shown in the last year.;