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2018 (11) TMI 1430 - ITAT JAIPURTrading addition - GP estimation - CIT-A applying the g.p. rate of 1.67% as against g.p. rate of 0.93% declared by the assessee - Held that:- The average of G.P. declared by the assessee in the past years which is accepted or attend the finality will be a reasonable and proper basis for estimation of income. Hence, we find that the Assessing Officer was very reasonable and just in estimating the income on the basis of the average of the G.P. declared by the assessee for last three years. The ld. CIT(A) has restricted the addition by applying the G.P. for the immediate preceding year and the revenue has not challenged the same, therefore, we do not find any reason to interfere with the impugned order of the CIT(A) qua this issue. The explanation of the assessee for declining of G.P. due to the market condition can be considered only when it is supported by the books of account. Therefore, once the books of account are rejected then this contention of the assessee cannot be accepted. Disallowance of 10% of the expenditure for want of supporting evidence - Held that:- We find that the liability of the expenditure of which 10% was disallowed by the Assessing Officer pertains to audit fee, rent, salary expenses, freight and telephone expenses etc., therefore, the audit fee, rent, salary expenses are very much verifiable and can be compared with the earlier years being recurring in nature. These expenditures are also verifiable independently from the recipients. Hence, the expenditure for audit fee, rent, salary and telephone expenses which are verifiable from the record cannot be disallowed in the manner, the Assessing Officer has made an ad hoc disallowance. Hence, to the extent of the expenditure on these accounts being audit fee, rent, salary and telephone expenses is deleted. The rest of the expenditure for which 10% was disallowed for want of supporting evidence is consequently upheld. Accordingly we modify the orders of the authorities below qua this issue. The Assessing Officer is directed to rework the disallowance of 10% on remaining items of expenditure. - Decided partly in favour of assessee.
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