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Pr. Commissioner of Income Tax-3 Versus Purshottam B Pitroda

2017 (5) TMI 786 - GUJARAT HIGH COURT

Addition on account of low Gross Profit - Held that:- The reasoning given by the Assessing Officer that in the earlier years with respect to the same contract the respondent – assessee estimated the profit at 53.32%. However, the Assessing Officer has not properly appreciated the fact that there may be number of reasons for decline in the profit. The expenditure might have increased and /or maybe for some or the other reason the profit might have decreased. Merely with respect to the same contra .....

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oss Profit. Under the circumstances, the learned tribunal has rightly observed and held that the Assessing Officer was not justified in estimating the Gross Profit ratio at 53.32% against the claim of the respondent – assessee of Gross Profit at 48.39%. - Whether the assessee is doing the huge turnover without maintaining site wise stock register, work-in-progress register - Held that:- What was weighed with the Assessing Officer was that in the contract between the GMDC and the respondent – .....

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el expenses to the extent of 30% the Assessing Officer was not justified in restricting the diesel expenses to 30%. - TAX APPEAL NO. 287 of 2017 - Dated:- 3-5-2017 - MR. M.R. SHAH, AND MR. B.N. KARIA, JJ. FOR THE APPELLANT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal A Bench, Ahmedabad (hereinafter referred to as the learned tribu .....

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(A) Whether the Hon ble ITAT has erred in law and on facts in deleting the addition made on account of low Gross Profit without considering the facts of the case? (B) Whether the Hon ble ITAT has erred in law and on facts by not appreciating the facts arrived by the Assessing Officer that the assessee is doing the huge turnover without maintaining site wise stock register, work-in-progress register. [2.0] The respondent - assessee filed the return of income for the Assessment Year 2007-08 declar .....

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ent - assessee and estimated and considered the diesel expenses at 30%. The Assessing Officer did not accept the Gross Profit at 48.39% as declared by the respondent - assessee and considering the overall Gross Profit declared in earlier years, which comes at 53.32%. The Assessing Officer estimated the Gross Profit ratio at 53.32% and made the addition of ₹ 1,76,91,830/-. [2.1] Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer making the addition of ₹ .....

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s given rise to the present Tax Appeal. [3.0] Shri Nitin Mehta, learned advocate appearing on behalf of the revenue has vehemently submitted that in the facts and circumstances of the case, more particularly, when the respondent - assessee did not maintain the stock register site wise as well as item wise and on quantitative basis, Assessing Officer was justified in rejecting the books of accounts. It is further submitted by Shri Nitin Mehta, learned advocate appearing on behalf of the revenue t .....

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atio at 53.32% and thereafter was justified in making the addition of ₹ 1,76,91,830/-. It is submitted that considering the aforesaid facts and circumstances of the case, the learned tribunal was not justified in deleting the addition made by the Assessing Officer made on account of taking Gross Profit ratio at 53.32%. Making the above submissions, it is requested to admit /allow the present Tax Appeal. [4.0] We have heard Shri Nitin Mehta, learned advocate appearing on behalf of the reven .....

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the outset, it is required to be noted that the Assessing Officer rejected the books of accounts mainly on the ground that the respondent - assessee had not maintained the stock register site wise and item wise, which was maintained /produced on estimation basis. The Assessing Officer doubted the diesel expenses of 39% claimed by the respondent - assessee and restricted it to 30% considering the terms and conditions of the contract between the respondent - assessee and the GMDC. The Assessing O .....

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e books of accounts, in that case, the Assessing Officer was required to do the exercise of estimating the Gross Profit. The Assessing Officer has estimated the Gross Profit at 53.32% against the claim of the respondent - assessee at 48.39% considering the overall Gross Profit ratio declared in the earlier years. The reasoning given by the Assessing Officer for the aforesaid is that in the earlier years with respect to the same contract the respondent - assessee estimated the profit at 53.32%. H .....

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