- (1.) THE brief facts giving rise to this reference are that the assessee, a registered firm, had during the year of account undertaken four country liquor vends at Sareen, Dhandari, Gill and Dholewal. For the accounting year ending 31st March, 1971, relevant to the assessment year 1971-72, the assessee filed a return of income declaring an income of Rs. 76,559. The ITO rejected the books of the assessee in all the four vends mainly because the rates of sales at which liquor was sold at all the four vends were not verifiable and correct. Accordingly, considering the sales at each of the four vends separately, the ITO computed the total income at Rs. 1,36,966.
(2.) THE assessee filed an appeal to the AAC who granted total relief of Rs. 15,614 against the addition of Rs. 58,036.
(3.) THE assessee filed an appeal before the Income-tax Appellate Tribunal, Chandigarh Bench (hereinafter referred to as "the Tribunal" ). The Tribunal sustained an addition of Rs. 25,082 and allowed a relief of Rs. 17,339 to the assessee. While deciding the appeal, the Tribunal found as follows in para. 3 of its order dated the 11th September, 1974. "3. After hearing both the parties, we are of the view that the proviso to Section 145 (1) is attracted to this case because the sales in all the vends are not verifiable. The learned counsel for the assessee had produced before us excise registers but these registers only show quantities purchased and sold. These registers do not mention the sale price and as the sale price remains unproved the proviso to Section 145 (1) is, in our opinion, applicable. When we examine the accounts of the four vends separately, we find in Sareen vends the rate of G. P. shown is 19%. This rate, in our opinion, is reasonable and we are, therefore, not inclined to sustain any addition so far as this shop is concerned. The addition of Rs. 6,000 sustained by the Appellate Assistant Commissioner is deleted. In Dhandari Kalan vend the assessee disclosed a gross loss of Rs. 18,191 and the addition sustained is Rs. 7,500. In the preceding year, the assessee had shown loss of about Rs. 17,000 in Gill shop and in I. T. A. No. 1161/1971-72 dated 7th September, 1973, this loss was disallowed by us on the ground that the loss was not proved. Even after the original addition of Rs. 11,536, the Income-tax Officer had computed the loss at Rs. 11,199. In our opinion, the loss is not satisfactorily proved and we are, therefore, not inclined to interfere with the addition of Rs. 7,500. In Gill shop, the G. P. shown is only 7. 4%. After making the addition of Rs. 6,000 the rate of G. P. works out to 3. 7%. This rate is actually less than the rate shown by the assessee itself from Sareen shop and Dholewal shop. We are, therefore, not inclined to disturb the addition made in this account also. In Dholewal shop the rate of G. P. disclosed is 3. 97%. Two additions have been made, one is of Rs. 11,921 on account of breakages. The assessee claimed breakages of 1,630 full, 459 half and 189 quarter bottles and as the breakages were not properly proved the Income-tax Officer allowed roughly half the breakage and made an addition for the balance half valued at Rs. 11,921. Half of the breakage comes to 815 full, 230 half and 94 quarter bottles and by taking the value at Rs. 10, Rs. 5 and Rs. 3, respectively, the breakage would be of the value of Rs. 9,582. We would sustain the addition of Rs. 9,582 only in this account. We are not inclined to sustain the other addition of Rs. 9,000 as this addition came to be made on the ground that the rate of sales made from 22nd March, 1971, to 3ist March, 1971, were slightly less. In our opinion, there is no justification for making this addition because it is an admitted position that in the month of March, the liquor contractors generally reduce their rates. The reduction in rates takes place because the quantity of liquor already purchased has to be cleared off before the close of the accounting year. The addition of Rs. 9,000 is deleted. We thus sustain an addition of Rs. 25,082 and allow a relief of Rs. 17,339. ";