1. SALEEM AKTHAR, J.-By this judgment we propose to dispose of both the aforestated cases as they relate to the same assessee in respect of two different assessment years. The respondent is a private limited Company engaged in the manufacture and sale of sweets, fruit, juice, jams, ghee and other fruit products. The respondent filed return for the assessment years 1965-66 and 1966-67 but the accounts version was rejected inter alia on the ground that the purchases were unverifiable and there was no co-relation between the raw material consumed and the finished products. The respon--dent field two separate appeals against the assessment orders passed by the Income-tax Officer and the learned Tribunal by a consolidated order, dated 3-2-1972 accepted the version of the assessee except for wastage and shortages. In these circumstances in both the aforestated cases the Department has raised the following question :- "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the accounts version of the assessee for the assessment year 1965-66 (except the shortage and wastages account) should be accepted?
2. In I: T. C. 74/73 the question is same, but it relates to assessment year 1966-67.
3. The Income-tax Officer has rejected the accounts on two grounds namely that the purchases made were not verifiable from the accounts books and further that the purchases of ghee were not verifiable as notices to sellers had returned unserved. These objections were raised before the learned Tribunal who has given its finding in the following terms :- The appellant's main case before us was against the rejection of the trading results on the plea that complete day-to-day records are maintained and that the finished products are also recorded from day---to-day. It was argued that all the sales excepting the cash sweetmeat sales were verifiable. Finally it was argued that the disclosed results in all the accounts were better than in the previous year when the same were accepted. We find that so far as the sweet account is concerned the appellant has maintained a daily production register from which co-relation of consumption is also available These registers were produced before us sad were shown to the Department Repre--sentative who could not find any flaw with the same. Similarly we find that the disclosed results in the sweet accounts are in any case batter than those accepted in the earlier year. There being no other defects in this account there was little justification for discarding the same. So far as the fruit account is concerned we find that the disclosed results for the brat year are definitely better than those of the earlier year when the same ranged between 25%. In this behalf we however, note that while the daily production registers war produced but the daily manufacturing record to corelate the same with consumption was not forthcoming. We find that in the firs year the applied rate of profit is almost the same as was disclosed and therefore, we would direct the acceptance of these results on the ground of results being satisfactory. But this is not the case in the second year and the disclosed profits have also fallen slightly in comparison to the year 196 -66, but basically due to the losses suffered on export which were heavier than in earlier year still, having regard to the past estimate and all other circumstances the estimates of the Income- tax Officer appear to us to be pitched too high. We wool consequently direct that the rate of 23 % be adopted on the estimated sales of Re. 26,00,000 as after excluding the export losses this would give an effective rate of over 27 % on local sales. So far as the Ghee account is concerned the Income-tax Officer's main objection was that the purchases were not verifiable. The appellant's argument before us was that full details of these purchases were furnished and that the payments had been made through cheques. If the enquiry of the Income-tax Officer was inconclusive in some respects to trace the sellers and purchasers, the appellant was never informed of this position. Finally it was argued that the disclosed results were always accepted in the past and the present results are not unsatisfactory in any manner. Here again the disclosed results are not unfavourable in any manner and the defects pointed out by the Income-tax Officer do not exist.
4. Consequently was cannot accept the rejection of this account as well."
5. Thus it is clear that after examining the record and on facts of the case, the learned Tribunal came to the conclusion that the purchases were verifiable and the rejection by the Income-tax Officer was not proper. Before us nothing has been pointed out by the learned counsel foe the applicant to establish that the purchases were not verifiable or that the finding of the learned Tribunal was not based on any evidence at all. Its the circumstances we reply the question in the affirmative.