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2015 (3) TMI 7 - AT - Income TaxAddition on account of income from business - low gross-profit - rejection of books of accounts - Held that:- Conclusion of the AO, to reject the books of accounts merely on the ground of non-furnishing of list of parties to whom sales have been made in cash cannot be a solitary basis to reject the books of account. The assessee has placed on record, the audited books of accounts, in which no discrepancy has been pointed out by the AO. Moreover, the assessee has explained that the low gross-profit is on account of incentive passed onto the retailers, and demonstrated that submission by inviting our attention to the expenditure incurred by the assessee this year and the preceding year to show the fall in expenses on account of rebate and rent. It was pointed out that the expenses of rebate were of ₹ 1,53,000/- in the preceding year, apart from cartage and distribution expenses of ₹ 57,000/- on a turnover of ₹ 1.33 crores. However, we take note that no expenses were incurred by the assessee in the relevant Assessment Year, as the assessee opted to avoid complete distribution cost and pass on the margin and incentive to the customers. No doubt, that approach has resulted into reduction of expenses including rent from ₹ 36,000/- for 5 months to ₹ 12,000/- for the entire year. However, we feel that the said explanation too, cannot be a sole basis to accept the declared result. In such circumstances, we deem it appropriate to remit the matter back to the file of AO, for re-consideration, of the trading results declared by the assessee, in the light of the explanation tendered before us. - Decided in favour of assessee for statistical purposes. Addition in respect of incentive received and not declared by the assessee - Held that:- We are remitting back the matter to the file of the AO, we set-aside the order of the AO on this issue and direct that he may ascertain the veracity of the claim of the assessee that the impugned incentive pertains to the earlier Assessment Year and not relevant to the Assessment Year under consideration. If the said claim of the assessee is found correct, then the impugned addition may be deleted otherwise it may be upheld.Decided in favour of assessee for statistical purposes.
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