TaxTMI 
TaxTMI 
2014 (1) TMI 1692
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..../- by applying G.P. Rate of 9% as against G.P. Rate of 7.18% declared by the assessee. 2. The assessee craves to alter, amend, and modify any of the grounds of appeal. 3. Necessary cost be allowed to the assessee." The ground raised in the departmental appeal, reads as under:- "Whether on the facts and in the circumstance of the case and in law the Ld. CIT(A) is justified in directing to make trading addition of Rs. 13,24,130/- by applying G.P. Rate of 9% as against the trading addition of Rs. 27,42,651/- made by the AO by disallowing @ 25% of unverifiable purchases of Rs. 1,09,70,605/- though the rejection of books of accounts u/s 145(3) of the IT Act, 1961 was upheld, keeping in view the decision of Ld. CIT(A) in the case of M/s. N....
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....88 ITR 10 (SC). The AO estimated income of the assessee by disallowing 25% of the purchases from the unverifiable parties by relying on the decision of Hon'ble Gujrat High Court in the case of Sanjay Oilcake Industries Vs.CIT (2008) 10 DTR 153. Accordingly, the addition of Rs. 27,42,651/- was made to the declared profit of the assessee. 4. Being aggrieved, the assessee carried the matter to the Ld. CIT(A) and submitted that the G.P. declared during the year was comparable with the earlier years and the slight decline in G.P. rate was on account of tough competition. It was further stated that the assessee had been able to maintain the G.P. and sales by reducing the prices, hence, the result declared by the assessee be accepted. It was furt....
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....on of books of accounts. On perusal of the details submissions of the AR, it is seen that the g.p. has declined this year from 7.63% in A.Y. 2007-08 to 7.18% in this A.Y. on sales from Rs. 8,99,95,783/- to Rs. 7,27,78,920/- in the present assessment year. It was also submitted by the AR that the Hon'ble ITAT Jaipur Bench had upheld the application of g.p. at 8.11% in the case of the assessee for AY 2006-07 on total turnover of Rs. 10,82,65,564/-. It has been consistently held by the Hon'ble ITAT Jaipur Bench that g.p. improves with the decline in turnover. Since the sales have declined during this A.Y. from Rs. 10,82,65,564/- for AY 2006-07 to Rs. 7,27,78,920/- and the Hon'ble ITAT Jaipur Bench has held 8.11% as reasonable g.p. rate on the ....
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...., the rejection of books of account are correct. However, simultaneously the Jaipur Benches are also taking a view that addition made @ 25% of the unverifiable purchases are also not justified as, if any addition can be made that can be made taking into consideration the past history of the case and taking into consideration the current events of the case. Since the trading results shown by assessee are marginally low as compared to earlier year, the ld. CIT (A) made an addition of Rs. 1,00,000/-. However, we find that trading addition sustained by ld. CIT (A) at Rs. 1,00,000/- is on lower side taking account the unverifiable purchases of Rs. 3,51,76,910/- and taking into account that the parties who issued bills charges commission @ 0.20% ....