TaxTMI 
TaxTMI 
2015 (12) TMI 1684
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....udgment in the case of Awadhesh Pratap Singh Abdul Rehman & Brothers vs. CIT, 210 ITR 406 which is not applicable to assessee's case and not following Hon'ble Rajasthan High Court decision in the case of Malani Ram Jeevan Jagannath vs. ACIT (207 CTR 191) which is applicable to assessee's case. (ii) The ld. CIT(A) erred in confirming the GP addition by overlooking his own order for the assessment year 2007-08 passed on identical facts and summarily rejecting the detailed written submission of the assessee. (iii) The ld. CIT(A) erred in not allowing business loss incurred in Tushar Guest House which was duly supported with evidence. 2.1 Brief facts of the case are that the assessee is a manufacturer of various kin....
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....ry year besides competition being on increase, there is likelihood of reduction in the gross profit. The above figures fully demonstrate that assessee's turnover has increased from year to year. (iii) Comparative inventory of closing stock details were also filed which are part of the paper book. Thus increasing completion reduced the sale prices and increased input cost in India effected the reduction of GP. Ld. AO, thereafter asked the assessee to file day to day production register which is impossible to be maintained. Looking at the variety of the readymade garments of finished, unfinished and goods under processing, day to day stock cannot be maintained by any manufacturer. The AO however, rejected the books of account ....
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....g accepted the reason for fall in GP rate, namely, stiff competition in market and also that huge loss caused in particular transaction, neither the rejection of books of account was justified nor resort to substitution of estimated GP by rule of thumb merely for making certain additions. We are, therefore, of the opinion that the findings arrived at by the Tribunal suffers from basic defect of not applying its mind to the existing material which were relevant and went to the root of the matter. When all the data and entries made in the trading account were not found to be incorrect in any manner, there could not have been any other result except what has been shown by the assessee in the books of account. We are, therefore, unable to susta....
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.... rejected merely because gross profit is found to be low. It has been further held that books of account cannot be rejected on general assumptions. Such sketchy observation have no value for drawing any adverse inference to reject the books and estimate GP. It is contended that all these propositions are supported by judicial pronouncements as under:- (i) CIT vs. A Krishanaswami Mudaliar 53 ITR 122 (SC) (ii) CIT v Superior Crafts, 353 ITR 101 and Poona Ram 326 ITR 223 (Del.) (iii) Ram Avtar Ashok Kumar vs. CST (1980) 45 STC 366 (All.) (iv) R.V.S. and Sons Dairy Farm vs. CIT, 257 ITR 764 (Mad.) (v) Action Electricals vs. DCIT, 258 ITR 188 (Delhi) (vi) CIT vs. Jas Jack Elegance Exports,324....
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....ion. Therefore, books of account may be upheld and gross profit addition may be deleted. 2.7 The ld. DR supported the orders of the lower authorities. 2.8 We have heard the rival contentions and perused the materials available on record. As the facts emerges that the assessee is a 100% exporter of the readymade garments and books of account are duly audited and supported by records. There is no adverse comments about the transactions, expenditure and stock maintenance, comparative stock inventory prepared by the assessee is based on the record and lower authorities have not pointed out any specific defects in the valuation of the closing stock and items. In our considered view, the books of account of the assessee cannot be rejected i....