TaxTMI 
TaxTMI 
2019 (2) TMI 1649
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....ustified in holding that the Assessing Officer did not find any specific fault with the books of the assessee while rejecting the books of accounts. 2. On the facts and circumstances of the case and in law, whether the ld.CIT(A) is justified in holding that rejection of books of accounts by the Assessing Officer is not correct without considering the specific fault mentioned by the Assessing Officer in the assessment order. 3. The assessee is engaged in the business of manufacturing in export of diamond studded jewellery. Analyzing the profit and loss account of the assessee, the Assessing Officer (A.O.) noted that in the current Assessment Year, the assessee has 10% increase in the sales. Further, he observed that the consumpti....
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....ove is more or less the same so the cost of goods sold for the year under consideration is being worked out at Cost for F.Y. 2009-10 5,97,13,866/- Add: 30% price 1,79,14,160/- 7,76,28,026/- Inflation of cost has led to lowering of Gross Profit and in turn lowering of taxable profits accordingly the sum of Rs.(9,18,81,666 - 7,76,28,026) = 1,42,53,640/- is being added back to the gross profit to align it with the prevailing rates and is recomputed accordingly. 5. Considering the facts and materials available on record, the total income of the assessee is computed as under: Income from business/profession Net profit as per P&L Account 33,40,850 Add: As discussed in para ....
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.... books u/s. 145, he should have resorted to best judgement assessment whereas the AO resorted to addition of Rs. 1.45 crorese based on the same books he rejected u/s. 143(3). Assessee in support of his arguments relied on the following decisions :- a. Reliable Surface Coatings 7 ITR (Trib.) 183 (Ahd.) b. SRJ Peety Steels (P) Ltd. 137 TTJ(Pune) 627 c. Budhalal & Co. 47 SOT 27 d. Vishal Jewellers 46 SOT 306. 6. Considering the above, the ld. CIT(A) opined that the A.O. has not found any specific fault in the books of the assessee. That he has neither analyzed the increase in the consumption nor given any reason for rejecting the assessee's explanation in this regard. The ld. CIT(A) concluded as under: ....
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....ther submitted that if further enquiry was required, the matter can be remitted to the file of the A.O. 9. Per contra, the ld. Counsel of the assessee reiterated that no specific defect has been found by the A.O. in this regard. The assessee has duly explained the reason for the variation in the gross profit. The explanation is duly recorded in the aforesaid order of the ld. CIT(A). The explanation given is that there is fall of G.P. of approximately 11% during the year due to increased manufacturing activity, increased manufacturing expenses and also due to outsourcing of job work which is because of strategic shift in assessee's manufacturing activities by modernisation. That it was further stated by assessee that in the immediate ....