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2012 (11) TMI 657 - AT - Income TaxAddition on account of low G.P. - alleged that during the year under consideration the gross profit was 7.37 % as against the gross profit at 7.79% in the last year – Held that:- the Revenue authorities must have come across the case of other assessee’s whereby securing similar or more turnover the assessee suffers a loss in the business or secured lesser profit than the assessee. - In the instant case, as no specific defect in the various expenses claimed by the assessee in the P&L A/c. could be pointed out by the Revenue, the Ld. CIT(A) was not justified in arbitrarily applying the rate of net profit of 3%. As the additions are found to be not based on cogent and relevant material and are based merely on the surmises and conjectures, the same are found unsustainable on the facts of the instant case. We, therefore, delete the addition Addition on account of unaccounted sale of diamond powder expenses - As per AO, no proof was given by the assessee for excessive consumption of the diamond powder for the year under consideration – Held that:- Consumption of diamond powder was excessive and appeared to be unreasonable considering the overall circumstances of the case. The assessee has also failed to establish the reasons for abrupt enhancement in consumption of diamond powder – addition upheld – against assessee Disallowance on account of foreign travel expenses – alleged that no bill was available in respect of foreign exchange purchase – Held that:- Foreign exchange was purchased in the names of relatives. Assessee’s argument was that those persons had gone for market survey. As per AO, no report about the work carried out by those persons was furnished. It was also pointed out by the AO that those relatives had no professional qualification or any experience of the business – matter remanded to AO
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