TMI Blog2021 (10) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reasonable on the facts of the case and in the absence of any serious rebuttal thereof, we decline to interfere. GP estimation - adopting GP rate of 9.30% in place of GP rate of 7.03% arising from the book results - assessee contends that it is mainly in the business of imports and any fluctuation in the foreign exchange rate could naturally have cascading effect on the Gross Profit where the contract for sale has already been entered - HELD THAT:- As Gross Profit in the subsequent assessment years have fallen down further from 7.03% to 5.39% in sync with increase in turnover. The book results in the subsequent year have been accepted by the Revenue. Thus, when seen on broader parameters, the book results of the assessee should be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of 20% made by the AO. The disallowance sustained by the Ld. CIT(A) is not justified. 3. Ld. CIT(A) erred in confirming addition of ₹ 61,29,546/- made by the AO rejecting the book results and applying GP rate of 9.30% in place of the disclosed GP rate of 7.03%. The addition made by the AO and confirmed by CIT(A) is not justified. Rejection of books and estimation of profit is not justified and is illegal. 2. As per Ground No. 1, the assessee has challenged the addition of ₹ 2,15,750/- made by the Assessing Officer under Section 68 of the Act on account of loan received by the assessee from one Sunil Kumar Prashan Kumar HUF and interest thereon. As noticed, in the course of the scrutiny assessment, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has not made any further efforts to make enquiry, an adverse inference cannot be derived automatically. It was contended that the case of assessee is on a much higher pedestal having regard to the fact that notice under Section 133(6) was served but not responded. The learned Counsel further referred to several judicial precedents for the proposition that where the repayment has been made, the addition under Section 68 is not justified. 2.2. On appraisal of the facts narrated above, we find that the assessee has received the money through banking channel and also repaid the same through banking channel. The interest has been paid on the loans availed and the payment has been made after deduction of TDS. Thus, the whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of vehicle, travelling and telephone expenses partly sustained by the CIT(A). The assessee could not, in any manner, controvert the view taken by the CIT(A). The action of the CIT(A) being reasonable on the facts of the case and in the absence of any serious rebuttal thereof, we decline to interfere. 5. Ground No. 2 of the assessee's appeal is dismissed. 6. Ground No. 3 concerns the addition of ₹ 61,29,548/- made by the Assessing Officer by adopting GP rate of 9.30% in place of GP rate of 7.03% arising from the book results. 6.1. Before the Tribunal, the learned Counsel for the assessee submitted, at the outset, that increase or decrease in the Gross Profit ( GP in short) ratio and the Net Profit ( NP in short) rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich detailed working is placed at page no. 55 of the paper-book; (iv) Custom duty on purchase of wire-netting was 10% higher in FY 2011-12 which further increased to 12.36% in the year under consideration. The value of imported wire-netting being substantial, the additional burden of custom duty is about ₹ 8.83 lakhs which could not be passed on to the purchasers; (v) The turnover during the year increased by about 60% owing to lower margins of profits charged by the assessee. 6.4. The learned Counsel further pointed out that in the subsequent assessment year, i.e. AY 2014-15, the turnover of the assessee again increased by about 71% as compared to the Assessment Year 2013-14 in question. The GP rate in the subsequent y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. No discrepancy in the valuation of closing stock was pointed out by the Assessing Officer or by the CIT(A) either. Thus, by implication, the transactions in the trading account were without much dispute. The assessee has attempted to explain the fall in GP by citing specific reasons. The assessee contends that it is mainly in the business of imports and any fluctuation in the foreign exchange rate could naturally have cascading effect on the Gross Profit where the contract for sale has already been entered. This apart, the substantial increase in the turnover has been noticed. The assessee seeks to explain that the higher turnover could be achieved owing to lower profit margins. Such explanation merits acceptance. The Gross Profit in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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