( 1. ) IN this appeal preferred under Section 260a of the Income-tax Act, 1961 (for brevity "the Act"), the Revenue has called in question the penetrability of the order passed by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), in I. T. A. No. 243/ind of 1997 dated January 25, 1999.

( 2. ) THE facts as have been depicted are that the respondent-assessees firm carries on business of liquor contract. For the assessment year 1993-94, the asses-see was handling Sehore Group, Ashta Group and Doraha Group of shops. It filed the return disclosing income of Rs. 98,245 which was the profit as per the profit and loss account after allowing interest and remuneration to partners. The profit prior to allowing of interest and remuneration was Rs. 3,89,525 which was said to be supported by the certificate issued by the competent authority of the Excise Department. As per P-5 certificate for the three groups, the profit worked out to Rs. 3,89,525. As observed in the assessment order the assessee did not maintain shop wise accounts and no cash memos were produced and, therefore, the sale price mentioned in P-5 certificate could not be subjected to verification. The expenses mentioned in P-5 certificate could not also be verified in the absence of shop wise books of account. The Assessing Officer observed that the certificates were on the basis of the information given by the assessee including sale price which was not fixed by the Excise authorities but taken as per details given by the assessee. It was held by the Assessing Officer that the proper stock records were not maintained and accounting for empty bottles was also not proper. The Assessing Officer invoked the provisions contained in the proviso to Section 145 (1) of the Act and estimated the profits as 21/2 times the licencing fee.

( 3. ) BEING dissatisfied with the order passed by the Assessing Officer the assessee preferred an appeal before the Commissioner of Income-tax (Appeals ). The appellate authority after discussing the facts in entirety, namely, no books of account were maintained for 40 individual shops where the liquor was actually sold ; no cash memos were issued ; system of accounting for sales is that when the shop owner of retail outlet comes to head office to take delivery of country liquor ; that he brought some cash with him which was entered in the cash book as cash sales ; that lot of liquor was issued to him ; that the aforesaid cash sales was not verifiable ; that it was very doubtful that the liquor was actually sold by retail shop owner at the rates now certified by the Excise authorities as per the certificates dated December 10, 1996, produced by the assessee ; that the expenses claimed by the assessee were also not fully verifiable ; and that the rejection of books by the Assessing Officer was jusi-fied. The appellate authority, eventually, came to hold as under :

" (a) The licence fees during the year had suddenly shot up to Rs. 2. 40 crores as compared to Rs. 1. 32 crores of last year and Rs. 91 lakhs of year before last. This shows that this year the contracts were taken under severe competition and hence it had adversely affected the N. P. rate and sales/ licence fees ratio. (b) The Commissioner of Income-tax (Appeals) in his appellate order for the assessment year 1983-84 has deleted the entire trading addition on the ground that licence fees during that year had increased by 38 per cent. as compared to the last year which had adversely affected the N. P. rate. The Commissioner of Income-tax (Appeals) in this order had relied upon the Income-tax Appellate Tribunals order dated October 21, 1981, in the case of Ramanad and Company. The N. P. rate upheld by the Commissioner of Income-tax (Appeals) in the assessment year 1983-84 was 3. 42 per cent. (c) The learned Income-tax Appellate Tribunal, Indore Bench, vide their order dated February 18, 1993, in the case of Dilip Kumar Shivhare for the assessment year 1988-89 have