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2006 (7) TMI 202 - HC - Income TaxRejection of books of accounts – estimation of income – basis – held that - The fact that the assessee used a bulk out of the carried forward stock of reusable scrap in the following year is well document, and it also explains the high yield of 92.75 per cent. in that year. The gross profit ratio at 14.84 per cent. during the year is comparable to the ratio of 15.48 per cent. in the preceding year. If the addition made by the Assessing Officer is sustained, it will reflect non-existent production and unearned profit in the abnormally high gross profit of 26.33 per cent. - The changed situation also explains that the assessee was always valuing its stock of scrap at ₹ 7 per kg. as it contained only non-reusable scrap. - This year, it was valued at ₹ 27 per kg. because for the first lime the closing stock also included the reusable scrap. Thus, considering all the facts and circumstances of the case, we see no justification at all to sustain the addition.
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