TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 612
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing out of the assessment order passed by the Assistant Commissioner of Income Tax, Circle-1(3), Vadodara [hereinafter referred to as "Assessing Officer or AO"], under section 143(3) of the Act dated 24.12.2019 for the Assessment Year 2017-18. 2. Facts of the Case 2.1 The assessee, an individual engaged in the business of trading in grocery items and cattle feed under the name and style of Akshar Trading Co., filed his return of income for the year under consideration on 13.10.2017 declaring total income of Rs. 5,62,070/-. The return was selected for scrutiny under the category of "Complete Scrutiny" through CASS. Pursuant thereto, notice under section 143(2) dated 09.08.2018 was issued and duly served upon the assessee. Further notices ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see at Rs. 14,03,440/-. 2.4 The assessee filed appeal before the CIT(A), Vadodara, on 22.01.2020 against the order passed under section 143(3). With the advent of faceless appeal regime, the appeal was transferred to the National Faceless Appeal Centre and finally assigned to the office of Addl./JCIT (A)-1, Gurugram. 2.5 Before the CIT(A), the assessee contended that the addition of Rs. 8,41,374/- was made merely on surmises, without rejection of books of account, and in absence of any specific defect in accounting or stock valuation. It was argued that the assessee had maintained and submitted complete quantitative details of purchases, sales, opening and closing stock with value and quantity, as also the tax audit report in Form 3CB/3CD....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AW BE DIRECTED TO BE DELETED. 4. YOUR APPELLANT PRAYS TO ADD ALTER OR AMEND GROUNDS OF APPEAL AT THE TIME OF HEARING. 4. During the course of hearing before us, the learned Authorised Representative (AR) reiterated the factual background and submitted that the assessee had maintained regular books of account duly audited under section 44AB of the Act, along with quantitative records of purchases, sales, opening and closing stock. No defect had been pointed out either by the Assessing Officer or by the auditors in the maintenance of such records. The AR submitted that the primary reason for the fall in the gross profit ratio during the year under consideration was attributable to abnormal fluctuations in the cattle feed segment, which con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-, giving sharply reduced GP margin of 2.91%. 4.3 This demonstrated that despite increase in sales volume, the profit margin drastically declined due to fall in selling price. 4.4 In addition, the AR furnished monthly summaries of cattle feed transactions for both the years under comparison, indicating the month-wise quantities purchased and sold, the corresponding purchase and sale rates, and the closing stock balances. A perusal of the said statements, according to the AR, clearly showed that in F.Y. 2016-17 the average rate of sale had consistently decreased, notwithstanding the higher turnover in terms of volume. 4.5 In support of the above submissions, the learned AR placed reliance on the decision of the Hon'ble Gujarat High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad filed comparative details for FYs 2015-16 and 2016-17, which clearly demonstrate that the fall in GP was essentially attributable to the cattle feed segment. While the turnover of cattle feed increased from Rs. 1.56 crores in FY 2015-16 to Rs. 1.77 crores in FY 2016-17, the gross profit thereon sharply reduced from 9.08% to 2.91% due to decline in selling rates, despite increase in volumes. The monthly summaries furnished substantiate this position, showing consistent fall in the sale rates even as the quantities traded increased. This explanation has a direct nexus with the fall in GP ratio. 6.2 It is trite law that low profit, by itself, cannot be a ground to reject the books of account or to make an addition, unless specific defects ....