TaxTMI 
TaxTMI 
2014 (11) TMI 399
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....o explain the reasons for declining of G.P. rate. It was submitted by the assessee before the Assessing Officer that there was substantial change in the nature of readymade garments. During the year, the assessee had purchased mostly grey fabric due to having orders for supply of better quality of products as compared to last year. After purchasing grey fabric, the assessee had got printed/processed and grey fabric from process houses/printers. The assessee had made 100% export of readymade garments. During A.Y. 2003-04, the printing and dyeing cost out of total manufacturing cost was 6.60% higher as compared to previous year. Further total raw material cost was also higher by 2.96%. The assessee had filed calculation sheets alongwith an explanation filed during the course of assessment proceedings. The reply of the assessee was not found convincing to the Assessing Officer due to the cost of sales also increased, which did not adversely impact the profit margins. The assessee himself admitted that average cost of raw material per meter had come down from Rs. 51.44 to Rs. 39.08 in comparison to just preceding year, which has been submitted by the assessee vide letter dated 11/10/20....
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....ur ITAT decision in the case of Haridas Parikh Vs. ITO (113 TTJ 274), Hon'ble Hyderabad ITAT decision in the case of Vishal Infrastructure Ltd. Vs. ACIT (104 ITD 537) and Hon'ble Delhi High Court decision in the case of CIT Vs. Smt. Poonam Rani (326 ITR 223). He further observed that the G.P. rate gone down to increase in the turnover compared to preceding year. The average manufacturing cost would depend upon the composition of item. Moreover, though, the average rate of manufactured goods worked out to Rs. 168.46 per piece but the appellant had valued the closing stock at Rs. 241.54 per piece. He found that on the basis of average sale price with average manufactured cost, the rejection of books of account is to be substantiated by bringing material on record that sales of assessee had been suppressed. He further relied the decision in the case of CIT Vs. Gotan Lime KHaniz Udyog (256 ITR 243) (Raj HC) wherein it has been held that merely books were rejected U/s 145 of the Act, does not lead to addition to the returned income. Accordingly, he deleted the addition made by the Assessing Officer. 4. Now the Revenue is in appeal before us. 5. The learned D.R. reiterated the fact....
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.... processes before final product of the readymade garments. It is difficult for the assessee to maintain stage wise stock register. The assessee was maintaining regular books of account with sales, purchase vouchers and books were audited but the audit report shows that record maintained by the assessee is not in proper manner as explained to them. The assessee changed the strategy of exporting the readymade garments by purchasing the grey fabric and printing it but these defects are not sufficient to reject the books result U/s 145(3) of the Act as held by the various courts and estimate the profit by the Assessing Officer. The learned CIT(A) has thoroughly examined all the aspects of all the defects pointed out by the Assessing Officer in his order, which has not been controverted by the learned DR. Therefore, we uphold the order of the learned CIT(A). Accordingly, the Revenue's appeal is dismissed. 8. The grounds of the C.O. are as under:- "1. The learned CIT(A) has erred on fact and in law in upholding the validity of assessment framed U/s 147. 2. The learned CIT(A) has erred on fact and in law in confirming the action of the Assessing Officer in not allowing the claim ....
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....on Laws (amendment) Act, 2005 w..e.f. 01/4/1998 has not been considered by the Hon'ble Supreme Court in the case of Liberty India which has been aptly discussed in the case of Saraf Seasoning Udhyog Vs. ITO reported in 40 TW Page 165. So, based on the view of Liberty India, the order cannot be subjected to section 154 proceedings. But the A.O. did not agree and withdrew the deduction earlier allowed U/s 80IB qua the DEPB amount. This order was challenged before the learned CIT(A), who also approved the action of the A.O. The Hon'ble ITAT held as under:- "2.7 It is an undeniable and undisputed fact that the A.O. has passed the impugned order based on the verdict given in Liberty India (supra). The perusal of the judgment reveals that their Lordships have not considered the amended provision. As against which as rightly pointed by the learned AR, the Hon'ble Rajasthan High Court in the decision of Saraf Seasoning Udhyog (supra) have discussed and relied on even the amended provision. Further, it is trite that when any amended provision is not considered or for that matter, any relevant provision of the Act is not considered while giving a judgment, it is treated as in per curi....