Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (6) TMI 571 - AT - Income TaxAddition on account of low GP - rejection of books of accounts without pointing out the defects - CIT-A deleted the addition - cause and effect relationship between the defect found by the AO and the addition made - As per revenue assessee had not furnished any specific explanation for fall in GP and the ld.CIT(A) despite the said fact had deleted the addition made - HELD THAT:- There is no coherence in the order of the AO. The defect found by the AO and the addition made by him, we find has no connection at all. AO had found that there were two annexures attached to the tax audit report reflecting two figures of GP for the year. However, he went to reject the books of the assessee and made GP addition on account of absence of any justification given by the assessee for fall in GP ratio in the impugned year, which was 5.7% as opposed to the GP shown by the assessee in the preceding year i.e. 11.14%. Therefore, there is no cause and effect relationship between the defect found by the AO and the addition made by him. AO rejected the book results as unreliable, but as rightly pointed out by the Ld.CIT(A) no specific defect has been pointed out by the AO in the books of the assessee. CIT(A) rightly said that the AO has failed to take note of the business circumstances in which the assessee operates, being an exporter of cotton garments wherein he has noted there is wide variation in margins. CIT(A) has rightly found no basis with the AO for making GP addition @ 2%, which is purely adhoc. No reason to interfere in the order of the ld.CIT(A) deleting the GP addition - Decided against revenue.
|