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DCIT, Central Circle-III, Mandi Gobindgarh Versus Sharman Udyog Pvt. Ltd.

Addition on account of fall in GP - proof of defects in books of accounts - Held that:- 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 Officer. Books are audited. Net gross profit has incre .....

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nst revenue - ITA No. 679/Chd/2016 - Dated:- 1-3-2017 - Bhavnesh Saini (Judicial Member) And Annapurna Gupta (Accountant Member) For the Appellant : Sushil Kumar, CIT-DR Respondent by : Ashwani Kumar, CA ORDER Bhavnesh Saini (Judicial Member) This departmental appeal has been directed against the order of ld. CIT(Appeals)-5 Ludhiana dated 18.03.2016 for assessment year 2011-12 challenging the deletion of addition of ₹ 35,24,925/- on account of fall in GP. 2. This issue pertains to rejectio .....

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ition to fixed asset during the year which has resulted in increase in depreciation claim by ₹ 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 was not found acceptable. As per AO the main reason for fall in income was a fall in GP rate at 35.75% compared to 37.1% for the last year. The AO also noti .....

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nce of 15% out of total vehicle expenses on account of personal use, resulting in addition of ₹ 2,01,830/- 3. The ld. CIT(Appeals), however, deleted the entire addition. His findings in paras 3.1.1 to 3.1.3 are reproduced as under : 3.1.1 The facts of the case, the basis of assessment and additions made by the A.O. and the submissions/arguments of the AR during the appellate proceedings have been considered. The AR has submitted that additional income of ₹ 250 Lacs surrendered during .....

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r, ₹ 30,00,000/- was surrendered towards unexplained documents/expenses which is more than the disallowance of ₹ 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 quantita .....

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c situation. The AR contended that the AO has not pointed out any defect or fault in books of account or bills or vouchers etc. Only on account of fall in GP or increase in one expense cannot be a basis for rejection of books of accounts. The AR has quoted case laws also in his favour. 3.1.3 After examination the documents filed with the submissions it is seen that vide letter dated 18.01.2013 quantitative and value wise details of opening and closing stock and basis of valuation was given to th .....

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