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2015 (7) TMI 1360 - AT - Income TaxRejection of books of accounts - trading addition - application of gross profit rate of 21.44% as against declared gross profit rate of 19.97% - HELD THAT:- There is merit in the arguments of the AR that in semi precious stones and gems trade the number of stones are innumerable which are procured in various shapes, sizes and it is practically impossible to maintain shapewise, size-wise and colour-wise stock of manufacturing & wastage as required by the AO. Since no defect whatsoever is pointed out in the sales, purchases and trading results of the assessee consequently, in our considered view the books of account cannot be rejected. Our view is fortified by the judgment in the case of Malani Ramjivan Jagan Nath vs. ACIT [2006 (10) TMI 145 - RAJASTHAN HIGH COURT]. We uphold the maintenance of books of account of the assessee and finding of ld. CIT(A) for rejecting them is reversed. Quantum addition, since books of account of the assessee are upheld then nothing material remains to dwell on the estimate of income. It is trite law that if the books of account are proper then lesser earning of gross profit does not attract any addition besides the TO has gone up in this year. There is no justification in retaining addition, looking from other angle also, the issue is only about estimation of closing stock. Assuming an addition on account of closing stock is somehow made, the same is to be allowed to the assessee in the next year as opening stock which will reduce the profits of next year. This exercise is essentially revenue neutral between two years. In the case of CIT vs. Excel India [2013 (10) TMI 324 - SUPREME COURT] has held that addition in such revenue neutral exercise should not be made by the Department. Thus on both the counts, there is no justification in retaining the addition which is deleted. - Decided in favour of assessee.
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