TMI Blog2015 (5) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. GP Addition - rejection of books and the imposition of 12% GP rate - ITAT deleted addition - Held that:- Reason for rejection of the books of account was not sound given that the assessee was maintaining the consistent accounting method which had been accepted during all previous years. So far as the irregularities with respect to “bardana” was concerned ITAT held that the assessee during the course of hearing drew our attention towards the balance sheet and the accounts and shown us the opening stock, purchases and sale of bardana. In view of these findings which are entirely based on fact, this Court is of the opinion that unless the Revenue points out something fundamentally wrong or unreasonable in the ITAT’s approach, the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Open Court) 1. The Revenue appeals to this Court under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as the Act ), aggrieved by the order of the Income Tax Appellate Tribunal (hereinafter referred to as the ITAT ) dated 31.01.2011, so far as it relates to the dismissal of its appeal and correspondingly the relief granted to the assessee for Assessment Year (AY) 2003-04. Assessments for four years 2002-03 to 2005-06 were made on 29.12.2006 under Section 153A pursuant to a search conducted on 07.10.2004. The Revenue urges that the ITAT fell into error on the following questions:- (i) Disallowance of expenses in the profit loss account, specifically with respect to transport expenses claimed - only ₹ 3,38,184 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing a gross profit margin of 12% was arbitrary. In doing so, the assessee attacked the AO s approach stating that so far as the transport expenses were concerned, of the total expenses, the entire expenses of more than ₹ 7.21 crores had been substantially accepted of which the details and records in respect of ₹ 36 Lacs odd was not available. This constituted just about 5.1% of the total transport expenses. The AO had rejected the said claim of expenditure of ₹ 36 Lacs and instead worked out 1.75% of the total expenditure, amounting to ₹ 36,01,764/-, as the admissible figure. The CIT(A) upheld the rejection of books of account but granted limited relief to the extent that the GP rate was reduced from 12% to 11.6%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions relate to payment of freight charges to the transporter. We find from the record that assessee had incurred a sum of ₹ 7,21,16,088/- towards the freight. Out of this huge amount, it has incurred expenses of ₹ 36,84,500/- in cash. According to it, some time petty transports emphasized for making the payment in cash. In our opinion, this is not such a factor which may prevent the Assessing Officer to compute the true income of the assessee from the accounts This Court is of the opinion that the ITAT s reasoning is sound and does not call for interference. The extent of disallowance made towards transportation expenses claimed was ₹ 36,01,764/- which was concededly in cash. Counsel for the Revenue points out tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not reliable. The criteria for making comparison of yield by the Assessing Officer is not discernible. He observed that a loose paper was found at the premises of erstwhile partner and the yield computed on that loose paper did not match with the ultimate yield shown by the assessee. It is not coming out on the record that how that loose paper is relevant for working out the yield. The yield of the assessee ought to be verified from the factor, what type of rice it had purchased, how it has processed, what type of machinery it has used, those percentage ought to be compared with some similarly situated assessee or with the result of other years. No such steps have been taken by the Assessing Officer. He merely assigned one reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of appeal raised by the assessee in all the three years and set aside the finding of the learned revenue authorities. The income of the assessee is to be computed on the basis of books of account maintained by it and the GP addition made by the Assessing Officer in all the three assessment years is deleted. 8. The above findings are again a finding of fact. Revenue s appeal does not in any manner reflect how these findings are unreasonable or unsupported by the materials on record. Consequently, no question of law arises for consideration, as to the rejection of the books of account. 9. In view of the above conclusion, the further finding of the ITAT that the imposing of GP rate of 12% - later reduced to 11.6% was entirel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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