TaxTMI 
TaxTMI 
2025 (8) TMI 595
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....l income of Rs. 16,38,620/-. The case of the assessee was selected for complete scrutiny through CASS mainly on the basis of (1) Capital Gain loss on the sale of property and (2) Foreign remittance. The assessee company is engaged in merchant export of agri-commodities mainly soyabean meal and Indian yellow maize. The assessee has also exported commodities like Rape seed meal, sugar etc. The assessee company procures these commodities from the local market and exports the same. The account of the assessee company are audited and tax audit report (TAR) is filed. The addition of Rs. 1,90,78,444/- has been made to the Returned income of Rs. 16,38,620/-. The total income exigible to tax comes to Rs. 2,07,17,064/- (Rs. 16,38,620/- + 1,90,78,444/-). The addition is on account of low Gross Profit. 2.2 That during the course of the assessment proceedings the Ld. A.O asked to the assessee to show cause as to why there is a fall in Gross Profit from 13.1% to 0.23%. Various queries were raised and the assessee replied every query and explained the reasons for fall in Gross Profit. The major submissions were made vide letter dated 01.04.2021 and 03.05.2021. That it suitably explained to the....
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.... are audited. (3) Merely because GP margin is lower as compared to the preceding year which cannot be a ground for addition to the income unless the assessing officer points out to particular defect or discrepancies in the books of accounts maintained by the assessee. In order to reject the books, the AO should bring out that there has been a clear infringement of any accounting standard or accounting principles and prove the same by way of concrete and material evidence and not merely on the basis of some assumptions and presumptions. The law is clear that suspicion however strong cannot take place of evidences and proofs and addition can be made on the basis of relevant material and concrete evidence. 2.4 That the revenue being aggrieved by the "impugned order" has preferred the instant appeal before this Tribunal and has raised following grounds of appeal in Form No.36 against the "impugned order" which are as under:- "1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in law in deleting the Addition of Rs. 1.90 crores without appreciating the facts that Ld.AO has rejected the books of assessee after pointing out variou....
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....aper book page 69 which is a reply dated 03.05.2021 of assessee's CA to Ld. A.O wherein complete reply was filed. It was emphasized that components have changed. It tallies with page 51 & 52 of paper book. It was contended that comparison should be with comparable's. Land is not considered as there is no nexus with sales. Purchases and sales tally. Purchases are local only it is a matter of common sense. The purchase and sales are not questioned whereas books are doubtful but are not rejected expressly. Previous year figures cannot become binding guidelines. Previous years gross profit cannot be relied upon (There are no finding of Ld. A.O on purchases and sales). The Ld. AR then placed reliance on the judgment of Hon'ble Allahabad High Court dated 30.04.204 in case of PCIT v/s The Mahabir Jute Mills Ltd in ITA No.35 of 2024 - 2024:AHC:76350 - DB and interalia contended that on facts no question of law was framed by the High Court. Our attention was invited to para 5 of the judgment to contend that gross profit rate of previous 3 years cannot be made basis of addition. Reliance was also placed on the judgment of Hon'ble Delhi High Court dated 07.05.2010 in ITA No.406/2009 in case t....
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....139447.00 191939242.00 34748319.00 9710265.00 169855000.00 Gross Profit 1360820573.00 87393048.00 226687561.00 11547939.00 179565265.00 6291139.00 GP Ratio 6.96 5.05 3.38 The Ld. CIT(A) has observed that the gross profit ratio for Assessment Year 2017-18 was 3.38% which is much lesser than previous year gross profit. That basis Chart below:- Particulars A.Y 2015-16 A.Y 2016-17 A.Y 2017-18 Net Profit 21991502.00 1615156.00 1226819.00 NP Ratio 1.51 0.67 0.51 The Ld. CIT(A) has rightly held that the net profit has reduced to 0.51% i.e. a reduction of 0.16% despite a substantial reduction in sales in Assessment Year 2017-18. We hold that Ld. DR has not controverted above tables/chart basis any material on record whatsoever in any manner. 4.4 The Ld. CIT(A) in the "impugned order" has rightly held that the assessee is maintaining books of accounts which were audited. Merely because gross profit margin is lower in the year under consideration vis-à-vis preceding assessment years cannot be a ground of additions to the income of the assessee unless the Assessing Officer points out a parti....