2012 (2) TMI 155

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....ue reads as under: "1. The CIT(A) has erred in directing the AO to adopt the GP of preceding assessment year instead of average of last two assessment year." 3. The learned DR submitted that there was no justification for the CIT(A) to apply GP rate of the preceding assessment year 2000- 01 instead of the average of the last two assessment years, as applied by the AO. He submitted that the assessee has not maintained daily records of consumption of colours and chemicals and did not maintain stock register. There was high variation in the consumption of raw-material month-wise. In these facts, the AO has rejected the book results shown by the assessee and has estimated the income of the assessee by applying the average GP rate of the l....

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....ding asstt.year at 9.28% for the relevant accounting period. There being no material to suggest that the GP rate applied by the CIT(A) was not reasonable or was without any basis, we uphold the order of the CIT(A) and the ground of the Revenue is dismissed. ITA No.274/Ahd/2009 (A.Y. 2003-2004) 5. The grounds of the appeal of the Revenue are as under: "1. The CIT(A) has erred in law and on facts of the case by deleting the 3% disallowance made by the AO on account of unverifiable purchases amounting to Rs.7,97,538/-. 2. The CIT(A) has erred in law and on facts in deleting the 3% disallowance made by the AO on account of unverifiable consumption of colour and chemicals amounting to Rs.14,51,596/-.   3. On the facts and in ....

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.... AO in rejecting the books of accounts and estimating the income of the assessee, has been upheld by the CIT(A) and this issue is not in dispute before us. The GP rate of 10.65% shown in the immediately preceding assessment year was applied to the turnover of the assessee which could not be said to be unreasonable or without any basis. With regard to other issues of further addition on account of unverifiable purchases and unverifiable consumption of colour and chemicals, we find that once the account books of the assessee are rejected and average rate of GP is applied to the turnover of the assessee and trading addition is made, there is no justification for making any addition on the basis of same rejected account books on account of the ....