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2023 (11) TMI 325 - ITAT DELHIScrutiny assessment - Net Profit rate @ 5.59% - reasons for decline in the N.P. ignored - HELD THAT:- CIT(A) has compared the ratio with the immediately preceding A.Y and after completely ignoring the decline in the profit and closure of business in the subsequent A.Y. N.P. ratio for A.Y 2013-14 is 0.32% which became loss of 0.73% in A.Y 2014-15, 19.57% in A.Y 2015-16, 86.70% in A.Y 2016-17 and finally the business was closed in A.Y 2018-19. Assessment orders for A.Ys 2013-14 and 2014-15 are placed on record which assessments were made u/s 143(3) of the Act and loss was accepted as such. Thus we are of the considered view that the first appellate authority has grossly erred in not considering the reasons for decline in the N.P. in true perspective. Trading account is quantified, books of account are audited. No error infirmity or defect has been pointed out. Therefore, the addition solely based on comparison with profit of immediately preceding A.Y, ignoring the profit of earlier years and subsequent A.Ys is uncalled for. We, therefore, set aside the findings of the ld. CIT(A) and direct the AO to delete the impugned addition. Appeal of assesseeallowed.
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