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2013 (6) TMI 479 - AT - Income TaxAddition on account of gross profit rate by applying the provision of Section 145(3) - Held that:- As the assessee himself has accepted that books of account regarding trading account are not maintained properly and further there was discrepancies found in the closing stock. Further the assessee failed to furnish proper bills for purchases of stones and therefore, in the absence of verifiable documents for purchases of stones as well as proper maintenance of books of account and the discrepancies in the stock, AO has rightly invoked the provision of Section 145(3) - Against assessee. GP rate of 30.50% (as applied by the AO) as against 24.98% declared by the assessee - Held that:- When the assessee's own comparable gross profit rate accepted by the Revenue is available then in the facts and circumstances of the case, the average of earlier years gross profit rate would be reasonable and proper gross profit rate for the purpose of determining the income by applying the provision of Section 145(3) of the Act. Accordingly in our view the average gross profit rate for the assessment year 2006- 07 and 2007-08 which comes to 25.50% would be applied for the year under consideration - partly in favour of revenue. Accident related expenses disallowed - Held that:- As apparent from the reasoning given by the CIT(A) which manifests that when the expenditure on the repair of existing vehicle whether major or minor has to be treated as Revenue expenditure and not capital. Even otherwise, when the expenditure is incurred for the repair of the accidental vehicle, the same cannot be treated as capital nature. Accordingly, no reason to interfere with the order of CIT(A) whereby the said addition was directed to be deleted. Against revenue. Disallowance of expenditure for replacement of old and damaged body of trucks - Held that:- The replacement of body of the trucks is accumulated wear and tear expenditure and therefore, it does not fall under expression current repair in terms of Section 31 of the Act. However, since expenditure has been incurred for replacement of the parts of the truck which does not bring any new asset into the existence but only made the existing asset as fit for use in the business of the assessee. Therefore, the expenditure is allowable under the provision of Section 37(1). Disallowance of 20% of the car expenses and depreciation - Held that:- The assessee is an individual and it has not brought on record that he is maintaining separate private car for his personal use. Thus concur with the views of the authorities below that perusal use of the vehicle cannot be ruled out. Disallowance on account of diwali and office expenses for want of proper vouchers and personal element - Held that:- Though in principle when the assessee has failed to produce the relevant evidences in support of the claim of the expenditure, the disallowances made by the authorities below cannot be faulted with however, disallowance of 10% of the same would be reasonable and meet the ends of justice.
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