TaxTMI 
TaxTMI 
2014 (7) TMI 868
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....in the business of manufacturing of shoddy yarn. The return of income for the year under consideration was filed by it on 28-10-2007 declaring total income at 'nil'. During the course of assessment proceedings, it was noticed by the A.O. from the audit report filed by the assessee along with its return of income that the opening as well as closing balance of finished goods was valued by the assessee at selling price instead at cost or market price whichever is lower. Since no explanation in this regard could be offered by the assessee to the satisfaction of the A.O., the later revalued the opening and closing stock at cost or market price whichever is lower and the resultant difference of Rs. 1,67,659/- was added by him to the total income ....
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..... 5,64,668/- taking note of the earlier years gross profit of the appellant company which was disclosed by the appellant company in A.Yr.2004-05 to A.Yr.2006-07. I find that the A.O. adopted the average gross profit and worked out the aforesaid disallowance after taking note of the fact that in the current year the appellant company has disclosed a very meager gross profit margin of 3.65%. The appellant company's reasons for such low gross profit has been rejected by the A.O. after taking note of the submission of the appellant company on record. However, taking note of the appellant AR's submission and also the A.O.'s order in the interest of justice, I consider it proper and appropriate to hold that the addition of Rs. 3 lakhs will be jus....
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....ingly dismissed as not pressed. 6. As regards the issue raised in ground No. 2.1 and 2.2 relating to the trading addition made by the A.O. and sustained partly by the ld. CIT(A), the ld. Counsel for the assessee has reiterated before us the basic contention raised before the ld. CIT(A) that the books of account regularly maintained by the assessee and duly audited by the auditors were not rejected by the A.O. by pointing out any material or specific defects and in the absence of the same, trading addition made by the A.O. is not sustainable. In this regard, he has taken us through the assessment order to show that the books of account regularly maintained by the assessee and duly audited by the auditors are not rejected by the A.O. by poin....