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2016 (8) TMI 372 - HC - Income TaxGP estimation - rejection of books of accounts - Held that:- On the rejection of the books of accounts on the ground that an assessee had returned low gross profit percentage, it is open to the authorities to ascertain the correct GP rate. In such circumstances, the adoption of the GP rate instead of adding of ₹ 1.32 crores to the income of the assessee cannot be said to be perverse or irrational. The CIT(Appeals) had the GP rates of five assessees in respect of Phagwara and three in respect of Jalandhar. The GP rates of assessees of Phagwara ranged from 16.21% to 18.30% whereas the GP rates of three assesses at Jalandhar were 10.64%, 12.09% and 13.6%. The CIT (Appeals) adopted the GP rate of 25%. There is, however, nothing in the order to indicate why the GP rate of 25% was adopted. The average of GP rates of Phagwara and Jalandhar was also much less. The Tribunal on the other hand adopted the average GP rate of assessees at Jalandhar as the assessee in the case before us also carried on the business at Jalandhar. The Tribunal observed that the CIT (Appeals) had fixed the GP rate of 25% which was not based on any material or cogent reasoning. This finding of the Tribunal is based on facts which is neither perverse nor absurd.
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