- (1.) THIS appeal has been preferred under s. 260A of the IT Act, 1961 (for short "the Act") proposing the following in ITA No. 548/Asr/1999 in respect of the asst. yr. 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 AO whereby the latter had estimated the income from unaccounted sale by applying GP rate of 4.28 per cent as against the correct GP 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 asst. yr. 1993 -94, which was processed under 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 under s. 148 of the Act was issued to the assessee.
(3.) THE AO made addition on account of unaccounted sale of rice as was found to be entered in the note book (Annex. A6). 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 AO examined the peak of the daily sale and on that basis calculated the profit. Another diary entry annex. A7 was also found which contained entries in respect of the unexplained investment. The CIT(A) while rejecting the prayer for permitting the appeal to be withdrawn issued notice for enhancement and made further enhancement to the addition.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 CIT(A). 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 AO or the CIT(A) 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 AO calculated the peak investment on a particular date for which no explanation is filed by the assessee. The AO 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 GP 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 AO has taken a reasonable view while framing the assessment in the matter. The CIT(A) rightly enhanced the income as the AO 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 CIT(A). We confirm the same and dismiss this ground of appeal of the assessee." 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 P&L a/c and not in the trading account, thus gross profit was calculated without taking into account the said expenditure.;