Law:

Section:

Section 143 of the Income-tax Act, 1961 - Assessment - General - Assessee sold certain centering machines to a party - Books of account indicated cost at Rs. 9,432 - ITO had report of vigilance bureau and Board of experts in respect of cost of machines according to which cost per machine was Rs. 7,331 - Assessee was confronted with said report, and 'S', a partner of firm sent a letter stating that although cost of machine was much more than calculated by board of experts, its income might be worked out on basis of experts' reports - As a result of said letter ITO worked out gross profit on sale of machines and ultimately made addition in net income of assessee - On appeal, AAC reduced amount of addition - On appeal, before Tribunal , assessee contended that it was not consented with experts report and further said report was not on record which clearly indicated that statement made by assessee was under misapprehension - Whether once Tribunal recorded findings that assessee was confronted with experts report it was not possible to accept assessee's contention that letter given by partner of firm was under a misapprehension and ignorance of experts' report - Held, yes - Whether assessee's letter being a voluntary one, ITO was justified in working out profit on sales of those machines by deducting cost price as worked out by experts from sale price - Held, yes FACTS The assessee had sold 19 centering machines to certain party at the rate of Rs. 15,500 per machine. The books of account indicated the cost at Rs. 9,432. The ITO had the report of the Vigilance Bureau and a board of experts in respect of costs of manufacturing machines which according to them, after deducting 25 per cent profit for the trader came to Rs. 7,331 per machine. The assessee was confronted with this report, and 'S' a partner of the firm, sent a letter stating that although the cost of the machine was much more than calculated by the board of experts, its income might be worked out on the basis of the experts' reports. It was stated that this admission was being made without prejudice to the right of the assessee to contest the penalty proceedings. As a result of this letter the ITO worked…

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