M.A.A. Khan, JM - Since common grounds on identical facts were raised in both these appeals, these were heard together and are now being disposed of by this consolidated order.

2. Assessee M/s Badruddin & Party (ITA Nos. 905/Jp/95) is an Association of Persons (AOP) constituted by 23 persons. For the year under consideration, the assessee was granted a licence by the Excise authorities in Uttar Pradesh (U.P.) to carry on the business of purchasing and selling country liquor and Indian made foreign liquor (IMFL) for Agra and Kireculi groups in U.P. The assessee carried on such business in these areas during that period and returned a total income of Rs. 40,03,343 for assessment year 1990-91. On total sales of country liquor at Rs. 8,70,58,306, the assessee had declared gross profit of Rs. 38,50,877 on total sales of IMFL at Rs. 23,06,973 gross profit of Rs. 80,508 was declared and taken to the P&L A/c. However, the assessee allegedly agreed that the gross profit of Rs. 80,503 from IMFL business may be treated as net profit. The Assessing Officer (AO) was of the opinion that the profits from assessee’s businesses were required to be worked out as per provisions of s. 44AC of the