2011 (11) TMI 764 - HC - Income Tax

Bombay HC Upholds ITAT Ruling Deleting AO's Profit Additions

The Bombay HC upheld the ITAT decision to delete additions by the AO based on estimated additional gross profit of 4.9%. ITAT found AO's profit comparison ... Estimating the additional gross profit at 4.9% - ITAT deleted the addition - Held that:- Assessing Officer compared profits of the assessee with the comparable cases in the market where the profits of persons engaged in export of diamond was high. The Tribunal has recorded a finding of fact that in the assessment year in question, the gross profit has increased compared to the gross profit in the earlier years. The Tribunal has recorded finding that the assessee has maintained the carat wise stock register which is the regular practice prevalent in the diamond trade. The Tribunal has recorded a finding of fact that in the present case, the books of account maintained by the assessee could not be rejected without pointing out defects, if any, especially when the books maintained to the same effect in the earlier years have been accepted by the Revenue. No fault can be found with the decision of the ITAT. The Bombay High Court upheld the decision of the ITAT to delete additions made by the Assessing Officer based on an estimated additional gross profit of 4.9%. The ITAT found that the Assessing Officer's comparison of profits was unjustified as the assessee's gross profit had increased, maintained proper records, and had accepted accounts in earlier years. The Appeal was dismissed.