TaxTMI 
TaxTMI 
2014 (4) TMI 426
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....e assessee at 21.15%. 3. The brief facts of the case are that the Assessing Officer observed that the assessee was engaged in the business of manufacturing cork products used as sealing material in electrical transformers and automotive industry. He noted that the assessee has shown turnover of Rs.6,26,10,713/- and Gross Profit of Rs.1,32,44,314/- which worked out to 21.15% and as compared to the gross profit rate of 23.04% shown by the assessee in the immediately preceding assessment year 2005-06 the same was lower. The Assessing Officer show-caused the assessee, in reply to which the assessee explained that during the year under consideration there was fire at the factory of the assessee on 27.01.2006 due to which the factory of the asse....
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....e was no production in the month of February 2006 or production should be less as compared to other months which is not the case. The Assessing Officer further observed that the reason of the assessee given that there was loss occurred due to fire and as the insurance company accepted the claim of the assessee at Rs.44,85,337/- against actual the loss of Rs.50,09,366/-; therefore, Rs.5,34,029/- was debited in the Profit and Loss account as loss due to fire. The Assessing Officer allowed the loss as claimed by the assessee and held that the assessee has not given justification with supporting evidences for fall in gross profit from 23.04% to 21.15%. Further, the Assessing Officer also held that the auditor of the assessee has observed in the....
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....bove order of the ld. CIT(A), the assessee is in appeal before us. 7. The ld. AR of the assessee argued that the rejection of books of accounts by the Assessing Officer was not proper. According to him, the Assessing Officer has rejected the books results of the assessee only on the ground that the yield ratios worked out by the partners were not independently verifiable by the auditors of the company. He pointed out that no defect in the books of accounts maintained by the assessee has been pointed out by the Assessing Officer. He further explained that similar yield shown by the assessee in the earlier years was accepted by the Department and therefore, there was no reason to deviate from the earlier practice. He submitted that debit of ....
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....e Assessing Officer found that the assessee has shown the Gross Profit of Rs.1,44,25,508/- on turnover of Rs.6,26,10,713/- which worked out to 21.15% and when compared with the gross profit of 23.04% shown by the assessee in the immediately preceding assessment year 2005-06, the same was lower by 1.89%. The explanation of the assessee before the Assessing Officer was that due to fire at the factory premises of the assessee the factory was closed down for about 1½ months and the assessee had incurred loss of Rs.5,34,029/- due to fire which was debited in the Profit & Loss Account of the assessee. The assessee also explained that there was an award dated 27.10.2005 in Labour Court case No.511/05, in pursuance to which the assessee incu....
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.... income of the assessee. The ld. CIT(A) confirmed the action of the Assessing Officer. 10. We find that the loss of fire of Rs.5,34,029/- and expenses awarded by the Labour Court in case No.511/05 for Rs.6.95 lakhs are debited by the assessee in its Profit & Loss Account and not in the Trading Account. Therefore, these items do not affect the working of the Gross Profit of the assessee. Further, Assessing Officer as well as the ld. CIT(A) has observed that the yield of the assessee was not verifiable. No material has been brought on record either before the lower authorities or even before us by the assessee to show that the yield of the assessee was verifiable from the books of accounts and records maintained by the assessee. We find that....