TaxTMI 
TaxTMI 
2013 (11) TMI 1606
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..... 2. That on the facts & in circumstances of the case, the Ld. CIT(A) has erred on law & facts by applying the gross profit rate @ 4% (from 4.90%) assessed by Ld. AO ) against 3.41% shown by the assessee, despite no defects has been found by the Ld. AO in the books of accounts of the assessee." 2. Brief facts are: The assessee is an importer & wholesale trader of timber; and owns a shop & saw mill. During the year under consideration most of the timber was purchased from Singapore. According to assessing officer, though stock register is maintained but the same is not on the basis of description-wise purchase and sale of timber. Assessee declared a g.p. rate of 3.41%. Assessing officer rejected the books of account by giving a finding ....
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....the profits @ 4.90% on the basis of G.P. declared by other firms. The appellant declared G.P. @ 3.41% but stated that financial charges were considered in the trading account and after excluding the same, G.P. would work out @ 3.97% as against G.P. declared @ 4.34% in the A.Y. 2006-07 and 6.01% in the A.Y. 2005-06. The plea of the appellant is not tenable since the financial charges has been considered in the trading account for working out the G.P. in the last year, also. Further, no reason/ justification of decline in G.P. from 6.01% in the A.Y. 2005-06 to 4.34% in the A.Y. 2006-07 and 3.41% in the year under consideration has been given. The appellant further declared net profit at Rs. 2,57,024/- only on turnover of Rs. 6.38 crores and i....
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....tal 19.53% Average Rate 19.53/4 = 4.90% 9. At page 7 of the assessment order, the Assessing Officer has given the comparative position of sale and gross profit in the case of the assessee. The same is also reproduced herein below for ready reference:- Particulars/AY 2005-06 2006-07 2007-08 Sales 73194816.00 58871050.00 84009166.00 GP 1737528.00 1560090.00 3049494.00 NP 232204.29 239771.82 367238.40 GP Ratio 2.37 % 2.65 % 3.63 % 10. The assessment year under appeal is 2007-08. The comparable cases of other assessees are for AY 2004-05 to 2007-08. If we take the comparable cases of AY 2007-08, then we find that the GP rate for the comparable cases quoted by the Assessing Officer himself is 3.53....
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.... part of the trading addition by applying GP rate of 4%. The same is deleted. 3.1. It is pleaded that in the case of Krishan Kumar (supra), who is in the same line of timber business, working in the same locality, g.p. rate of 3.63% in the same assessment year has been held to be reasonable, therefore, there is no justification to hold that the assessee's rate of g.p. at 3.41% is low as in earlier year even a lesser g.p. rate has been accepted. The ITAT in the case of Krishan Kumar (supra) has held that the assessee's own previous record is to be considered. In the absence of any significant defects in the books of account and merely on hypothecated expectation of maintaining stock details, the assessee's books results which are otherwise....