TMI Blog2014 (1) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has also pointed out certain instances, which indicated discrepancies in the books of accounts. - The Assessing Officer's action in rejecting books of accounts was correct. Addition on account of low G.P. rate - The sale of assessee has increased to Rs. 13.31 crores as compared to sale of immediately preceding assessment year at Rs. 11.65 crores - It is a well settled proposition that increase in turn over can be achieved only by sacrificing some margin in gross profit rate - Taking into account increase in sale vis-à-vis gross profit rate shown in the earlier years, the Tribunal found it suitable to apply gross profit rate of 2.50 % - The Assessing Officer is directed to work out trading addition by applying gross profit rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/- and excess cash amounting to Rs. 9,00,749/- found during survey. Perusal of the profit and loss account of the assessee shows that the entire income surrendered during survey has been credited in the profit and loss account and from there the net profit has been worked out to Rs. 92,35,125/- which has been in turn distributed to four partners of the firm. 4. The source of investment in cash and stock found excess during the course of survey was taxed by the Assessing Officer u/s 69 of the Act and held that the assessee cannot treat the source of investment in assets found in excess during course of survey as income from business. After pointing out defects in the books of accounts, the Assessing Officer rejected the book results and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, ld. Authorized Representative, Shri Bharat Jhawar, supported the order of CIT(A) and contended that after taking unaccounted stock in manufacturing account, the gross profit rate will substantially higher than 2.83 %. Accordingly, there was no infirmity in the order of CIT(A) for deleting the addition made by the Assessing Officer by taking the gross profit rate of immediately preceding year. 8. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that during course of survey assessee has surrendered additional income of Rs. 1,04,95,003/-. However, return of income was filed at income of Rs. 92,35,120/-, which also included the surrendered income of assessee. We fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l increase only if unaccounted stock is sold at a higher gross profit rate. 9. Now coming to the addition made by the Assessing Officer on account of gross profit rate, we found that in the immediately preceding year, the assessee had shown sale of Rs. 11,65,97,439/- on which gross profit of 2.83 % was shown. However, during the year, the sales of the assessee has increased to Rs. 13,31,26,701/- on which gross profit rate works out to be 2.08 %. We found that in the assessment year 2006-07, the assessee had shown total sale of Rs. 11,11,97,015/- on which gross profit works out to 3.03 %. The summary of sale/gross profit/gross profit rate of the last three years works out as under :- Assessment Year Total Sale Gross P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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