TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 571
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....g to Asst. Year 2013-14. 2. This is a recalled matter. Earlier the appeal of the Revenue was dismissed on account of low tax effect. Subsequently, on Misc. Application No.47/Ahd/2020, appeal of the Revenue was recalled, when it was pointed out that the department's appeal fell in the Exception No. 10(f) clause in the CBDT circular 3/2018 dated 11.7.2018 and 2.8.2018 and also circular No.19/2019 dated 8.8.2019 which dealt with the withdrawal of appeal on account of low tax effect, due to prosecution under section 276C of the Act being launched against the assessee in the present case. Order in the MA of recalling the appeal for hearing is dated 12.10.2022. Thereafter, the appeal of the Revenue was fixed for hearing from time to time i.e. ....
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.... has erred in law & on facts in deleting the addition made by the AO on account of low GP of Rs. 98,66,323/- ii) It is, therefore prayed that the order of the ld.CIT(A) may be set aside and that of the AO be restored." 4. Sole grievance of the Revenue, as transpires from the grounds raised before us as above, is against the deletion of addition made on account of low gross profit amounting to Rs. 98,66,323/-. The contention of the ld.DR before us was to the effect that the assessee had not furnished any specific explanation for fall in GP and the ld.CIT(A) despite the said fact had deleted the addition made. 5. We have gone through the orders of the authorities below. A perusal of the order of the AO at para-2.4 reveals that ....
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....he books of the assessee under section 145(3) of the Act and made addition of 2% of turnover of Rs. 49,33,16,158/-, amounting to Rs. 98,66323/-. The relevant portion of the assessment order holding so has been reproduced above. 7. Aggrieved by the same the assessee carried the matter in appeal before the Ld.CIT(A) where he reiterated his contentions made before the AO and further stated that in the absence of any specific adverse finding there was no reason to reject the books of the assessee and make addition on account of GP. The ld.CIT(A)found merit in the contention of the ld.counsel for the assessee, and accordingly deleted the addition made holding at para- 8.2 of his as under: "8.2 I have carefully considered the facts of....
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....td 216 Taxman 225 (Guj). Considering the discussion above, addition of Rs. 98,66,323/- is deleted. Ground of appeal no.7." 8. Having gone through orders of the authorities below, we find that there is no coherence in the order of the AO. The defect found by the AO and the addition made by him, we find has no connection at all. As noted above, the AO had found that there were two annexures attached to the tax audit report reflecting two figures of GP for the year. However, he went to reject the books of the assessee and made GP addition on account of absence of any justification given by the assessee for fall in GP ratio in the impugned year, which was 5.7% as opposed to the GP shown by the assessee in the preceding year i.e. 11.14%. Ther....
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....it report two Annexure namely Annexure-I has been attached. As per one Annexure-I, Part-B the assessee had declared Gross Turnover of Rs. 49,33,16,158 and Gross profit of Rs. è´¬ 2.65.09.029. In another Annexure-I, Part-B the assessee had declared Gross Turnover of R 49,33,16,158 and Gross profit of Rs. 1,42.99.1941 On comparison of both of the Annexures there is difference of Rs. 1,22.09.835/- in Gross profit and both of the annexures were duly signed by the Auditor. Therefore, vide this office notice No. ITO WD-5/142(1)/GJP/2015-16 dated 16/03/2016, duly served upon the assessee on 17/03/2016, the assessee was asked to explain and show-cause why the books of accounts of the assessee may not be reject....
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....ion does not amount to rejection of books." The reply of the assessee has been carefully considered but the same is not acceptable as it is without any supporting evidences. The assessee in the preceding year had declared Gross Turnover of Rs. 2,58,46,666/- and Gross profit of Rs. 28,81,303/- which is 11.14 % of the turnover. In the current year by taking Gross Turnover of Rs. 49,33,16,158/- and gross profit of Rs. 2,65,09,029/-, GP is 5.37% of the total turnover. Therefore fall in GP in current year is 5.77% (11.14 %- 5.37%) on comparison to the preceding year. The contention of the assessee that there is a difference in opinion whether the said expenses is direct or indirect expenses and where it is incorpora....