TaxTMI 
TaxTMI 
2009 (2) TMI 855
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.... Learned Commissioner of Income Tax (Appeals) has erred in confirming GP addition of Rs. 16,13,014/- by applying GP rate of 38.79% as against GP of 30.47% declared for the year. Your appellant submits that fall in GP is duly explained to A.O. and hence addition made is unjust and uncalled for. It be held so now and GP addition made by the A.O. be deleted now. (3) The Learned Commissioner of Income Tax (Appeals) has erred in confirming the calculation of deduction u/s. 80HHC of the Act by - (i) Reducing 90% of labour job income of Rs. 8,75,233/- from profits of business treating the same as 'other income'. Your appellant submits that since labour job income being earned in the ordinary course of business and taxed by the A.O. under the head 'business income', the same be treated as 'business income' A.O. be directed to allow deduction u/s. 80HHC on same. (ii) Reducing Rs. 9,03,365/- being additional income disclosed during survey. Your appellant submits that income disclosed during survey being earned in the ordinary course of business, be treated as business income and A.O. be directed to allow deduction u/s. 80HHC on same. 5. The Learned Commiss....
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....time of hearing. Therefore, these grounds of appeal are being dismissed as not pressed. 4. Grounds No. 2 & 3 of this appeal are common, inasmuch as they relate with regard to rejection of books of accounts under section 145 of the Act and consequential addition of gross profit of Rs. 16,13,014/-. The Assessing Officer has dealt this issue in para 3 at pages 2 & 3 of the assessment order. As per tax audit report, the gross profit is 30.47% and net profit is 7.48%. As against this, in the last year gross profit was 39.21% and net profit was 7.04%. During the course of assessment proceedings, the Assessing Officer asked the reasons for fall in gross profit. The assessee submitted that fall in G.P. is due to reduction in domestic sales and export sales being more as compared to earlier years. Thereafter the Assessing Officer asked the assessee to produce all the supporting documents for verification in support of its claim. The assessee also submitted that during the previous assessment year 2003-04, the assessee was having a merchant export of Epoxy Die and Soyabin Oil, which has a major contribution to gross profit and during the year, such merchant export was not there. It was su....
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.... the assessee. 6. On appeal, in the impugned order, the Learned Commissioner of Income Tax (Appeals) upheld the action of Assessing Officer in rejecting the books of accounts and adopting the GP rate of 38.79% shown by the assessee in the earlier assessment year. Aggrieved by the order of Learned Commissioner of Income Tax (Appeals), the assessee is in appeal before the Tribunal. 7. At the time of hearing before us, on behalf of assessee Shri Sunil H. Talati, ld. counsel appeared and argued at length by stating that the books of accounts should not be rejected. Without prejudiced to this contention, the ld. counsel of the assessee submitted that even if the books of accounts are rejected, no addition should be made because in the assessment year under appeal, the net profit percentage to sales is 7.48% as against 7.04% in the immediately preceding assessment year. At page 108 of the paper book, the assessee furnished the statement showing gross profit and net profit percentage to sales of four assessment years. 8. On the other hand, Shri K. Madhusudan, ld. Sr. D.R. appearing on behalf of the Revenue vehemently supported the order of Learned Commissioner of Income Tax(Appea....
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....e- 11) 1,07,18,139 87,15,858 80,72,450 55,81,440 Merchant export purchase (Trading) 16,50,900 10,88,513 Manufacturing expenses (schedule- 12) 30,36,550 26,60,001 21,91,569 15,73,660 Total 1,37,54,689 1,29,36,759 1,02,64,019 82,43,613 Gross Profit Rs.60,52,497 82,72,659 51,27,159 53,77,092 Gross Profit % to sales 31.21% 39.21% 33.44% 39.57% Net Profit Rs. 14,50,071 14,85,442 1,23,961 6,64,100 Net Profit % to sales 7.48% 7.04% 0.81% 4.89% From the aforesaid chart, it appears that net profit to sales declared by the assessee is better than the immediately preceding year. However, we feel that this needs verification at the end of Assessing Officer. In case, net profit is better than the immediately preceding assessment year or more than average of last three years, in that event, no addition on account of low gross profit is called for. The Assessing Officer is accordingly directed to verify the working and if net profit percentage to sales is better than it was in the immediately preceding asses....
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....ofit & loss account, thus nullifying the effect of the disclosure. The Assessing Officer was of the view that this expenditure also represented unexplained expenditure for which the assessee had not been able to disclose any source. Under these circumstances, the Assessing Officer added a sum of Rs. 5,60,000/- to the total income of the assessee under section 69C of the Act as unexplained expenditure. 13. On appeal before the Learned Commissioner of Income Tax (Appeals), the assessee contended that since the additional income declared during the course of survey has already been disclosed, the same cannot be added once again. The Learned Commissioner of Income Tax(Appeals) confirmed this addition. At the time of hearing before us, the ld. counsel of the assessee drew our attention to pages 10, 20 and 30 of the paper book, wherein the excess stock of Rs. 3,05,000/- and other income of Rs. 5,98,365/- totaling to Rs. 9,03,365/- has been separately shown. It was, therefore, contended that the Assessing Officer added the same income again under section 69C of the Act on the ground that excess stock unexplained is unexplained expenditure and similarly other three income are also requi....
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....essee shall furnish the evidence of payment in the next financial year. The Assessing Officer will verify the same and re-adjudicate the addition of Rs. 71,860/- afresh in accordance with law. 19. Ground No. 10 of this appeal is with regard to disallowance of interest of Rs. 2,88,678/-. The Assessing Officer disallowed the same on the ground that the assessee did not produce bank statement to verify the cash flow and to examine whether interest free loan were given out of borrowed funds for making new investment of Rs. 27,99,296/-. The Assessing Officer, therefore, worked out interest on the total loan funds as on 31.3.2004 of Rs. 36,47,786/- and made the addition of Rs. 2,88,678/-. The Learned Commissioner of Income Tax (Appeals) in the impugned order confirmed the said addition. 20. At the time of hearing before us, the ld. counsel of the assessee pointed out that the entire addition is totally baseless as because details of interest expenditure of Rs. 4,34,359/- are on page 23 of the paper book being schedule 14 of the audited accounts. The ld. counsel further submitted that interest on C.C. accounts, as seen on page 17 being schedule 3 of the audited accounts is against h....