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2016 (10) TMI 712 - ITAT KOLKATADisallowance on low Net Profit percentage over turnover - AO has made the addition on the ground that the assessee has declared less profit in comparison to the AY 2010-11 - CIT granted the relief to the assessee as the AO failed to bring any defect in the booksHeld that:- In the instant case the AO has made addition on his surmise. It is well settled proposition of the law that for making any addition to the total income of assessee there has to be cogent evidence. In the absence of the same the addition shall not stand. The submission of ld. AR is that the profit ratio is the same as quoted by the AO i.e. 3.50% if we eliminate the interest and depreciation expenses from the profit. The same fact was communicated in the statement to the AO. There was no iota of defect in the books of the assessee. The case law cited by the DR is not relevant to the facts of the present case as besides the statement the AO has to bring sufficient evidence before making the addition. There is no material to justify the addition made by the IT authorities to the gross profit shown by the assessee in his account books. The additions were made on ad hoc basis and not on the evidence such as the trading conditions in similar trade or on the reconstruction of the account books of the assessee on the basis selected by the ITO which was different from the one adopted by the assessee. In view of above we do not find any reason to interfere in the order of the ld. CIT(A). Accordingly, we uphold the same. This ground of Revenue is dismissed. Addition u/s 40A(2) on expenses paid to the related parties - Held that:- AO has made the addition on his surmise and without bringing any defect in the expenditure incurred by the assessee. we also find that the similar expenses were claimed by the assessee in the earlier years and subsequent years and no disallowance was made. The ld. DR has also failed to bring anything contrary to the findings of ld. CIT(A). In view of above we do not find any reason to interfere in the order of the ld. CIT(A). Accordingly, uphold the same. This ground of Revenue’s appeal is dismissed.
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