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2018 (12) TMI 411 - HC - Income TaxAddition being 5% of the turnover - assessment completed under Section 143(3) - inflation of expenses - Held that:- It cannot be ruled out that the assessee has not inflated the expenses, however, found fault with the Assessing Officer in adopting 5%, pointing out that it is on higher side and directed the Assessing Officer to adopt 2.5%. The order passed by the Assessing Officer as well as the Tribunal are wholly erroneous. A low gross profit rate can at best be a reason for making an enquiry, but it cannot be a sole basis for making an addition. In Symphony Comfort System Ltd.[2013 (10) TMI 258 - GUJARAT HIGH COURT] held that the Assessing Officer cannot make addition merely by comparing the expenditure with preceding year's expenditure, which precisely was done by the Assessing Officer in the instant case, while he passed the assessment order dated 20.12.2016. Thus, we are fully convinced that the addition made by the Assessing Officer was rightly deleted by the CIT (Appeals) and the Tribunal fell in error in interfering with the said order and by way of a guess work reducing to 2.5% without any material before it. Thus, for the above reasons, the order passed by the Tribunal calls for interference. Appeal filed by the assessee is allowed.
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