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2007 (11) TMI 345 - AT - Income TaxTrading addition - rejection of the books of account u/s 145(3) - income from trading of machineries, electrical goods and accessories on wholesale and retail basis - HELD THAT:- It is well settled business proposition that for having increase in sales, a businessman has to sacrifice a small margin of profit rate. During the year the overall gross profit of the assessee has increased from Rs. 1.43 crores to Rs. 1.54 crores. No defect was found in the books of account. There is no valid reason for rejection of books of account during the year under consideration and thereby applying higher GP rate of 11.51 per cent. which was earned by the assessee on low sales of Rs. 1.24 crores in the preceding year. The other reason stated by the AO of making trading addition was that in asst. yr. 2001-02, GP rate declared by the assessee at 9.64 per cent was not accepted and trading addition so made by rejecting the books of account was confirmed by the learned CIT(A), therefore, by following the order of the earlier year the AO has made addition by rejecting the GP rate of 9.94 per cent declared during the year under consideration. The ld AR placed on record the order of the Tribunal in assessee's own case in AY 2001-02 wherein addition made by the AO by applying GP rate of 10.14 per cent was deleted by the Tribunal and the GP rate of 9.64 per cent declared by the assessee was found to be reasonable and correct. As the facts and circumstances during the year under consideration are same, the issue is squarely covered by the order of the Tribunal in the preceding year, respectfully following the same, we reverse the findings and conclusions of the lower authorities and direct the AO to delete the trading addition so made by him by rejecting the books of account. In the result the appeal of the assessee is allowed.
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