2017 (3) TMI 1546

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..... higher gross profit rate. The Assessing Officer has mentioned that the assessee has surrendered additional income of Rs. 250 Lacs u/s 132(4) under various heads, however, the return was filed at Rs. 2,08,19,701/-. The AO accordingly issued a show cause notice to the assessee to justify the returned income being less than surrendered income. In the reply, the main reason mentioned by the assessee was the addition to fixed asset during the year which has resulted in increase in depreciation claim by Rs. 2,10,83,260/- in this assessment year. It was also explained that financial expenses too have increased, and due to these two factors, the returned income was less than the surrendered income. The AO considered the reply but the justification .....

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..... in stocks/materials thus totaling 170 lacs, which is more than addition of Rs. 35,24,925/- made towards fall in GP rate. Further, Rs. 30,00,000/- was surrendered towards unexplained documents/expenses which is more than the disallowance of Rs. 2,01,830/- for personal use of vehicles by the director 3.1.2 The AR has also submitted that the GP rate during the year is 35.75 % against 37.10% of earlier year and decrease is only by 1.3%. The assessee maintained regular books of accounts supported by purchase and sales bills and vouchers for expenses and no defect was pointed by the AO in this regard. All the quantitative details were available and supplied to the AO vide reply dated 18.01.2013. The books are duly audited. The reason for increas .....

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..... g out specific defects, only on the basis of fall in GP. Therefore, the action of the AO is not found sustainable as per law. The rejection of the books is therefore, held unjustified and the resultant addition, of Rs. 35,24,925/- by applying GP rate @37% is accordingly deleted." 4. After considering rival submissions, we do not find any merit in this ground of appeal of the revenue. There is only small decrease in the gross profit rate as compared to the earlier year. The assessee has maintained regular books of account supported by purchase and sale bills and vouchers of expenses. No specific defects have been pointed out in maintenance of the books of account and vouchers. All the quantitative details were supplied to the Assessing Offi .....

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