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2017 (3) TMI 100 - AT - Income TaxRejection of books of accounts - substantial increase in the amount of wastage as compared to previous year - Held that:- On perusal of documents available on record, it is noted that the percentage of wastage during the year is 8.93% as against 15.8% in A.Y. 2010-11. The detailed working thereof has been reproduced above. Further, the turnover has, in fact, decreased from ₹ 21.85 crore to ₹ 16.59 crore during the year. Therefore, on both account, there is clearly an actual inaccuracy which has crept in or wrongly appreciated by the Assessing Officer which has resulted in rejection of books of accounts. Other reason mentioned for rejecting the books of accounts has been the decrease in the GP rate vis-ŕ-vis last year and non-maintenance of quantitative details in terms of raw material and finished goods account. On perusal of the record, it is noted that the fall in GP rate has been reasonably explained by the assessee through facts and figures and as far as the quantitative details of raw material and finished goods are concerned, the same have been appropriately disclosed in the Tax Audit Report and therefore, details have been submitted during the course of assessment and the appellate proceedings. In the light of above, we do not see any justifiable reason for rejection of books of accounts in the instant case. Further, no reasonable basis has been given for estimating the GP rate by the lower authorities. Taking into consideration the fact that in the previous years as well as in the subsequent years, the books of accounts have been accepted by the Revenue, we do not see any justifiable basis for rejection of books of accounts in the instant year. - Decided in favour of assessee. Disallowance of office expenses - Held that:- No specific expenditure has been identified by the Assessing officer which calls for disallowance either in terms of the said expenditure being bogus in nature or not incurred for the purposes of business carried on by the assessee. There is no basis for disallowance on adhoc basis in the eyes of law. In the result, the disallowance made by the Assessing officer and sustained by the ld CIT(A) is deleted.- Decided in favour of assessee.
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