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Issues involved: Appeal against order of CIT(A) restricting G.P. at 1% instead of 1.6% u/s.143(3) of the Income Tax Act, 1961 for Assessment Year 2007-08.
Issue 1: Estimation of Gross Profit The Assessing Officer (AO) estimated profit ratio at 1.60% due to a difference in transportation income and charges. The CIT(A) restricted the profit at 1% based on the appellant's turnover increase of 5.73 times from the previous year. The CIT(A) found the AO's application of last year's profit ratio on current year's turnover unreasonable. The appellant provided reasons for the rate difference in hire charges, which the AO failed to consider. The CIT(A) upheld the appellant's profit estimation at 1%, resulting in relief of Rs. 30,22,285. Issue 2: Admissibility of CIT(A) Decision The AO did not find fault in the appellant's books of account but applied the NP rate from the previous year. The CIT(A) justified the 1% profit rate based on the significant increase in turnover. During the hearing, the Departmental Representative (DR) could not challenge the CIT(A)'s decision or support the AO's order. The appellant provided detailed statistics explaining the hire charge differences. As the books were not rejected, the Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal. In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to restrict the gross profit at 1% instead of 1.6%, considering the significant increase in turnover and the appellant's explanations for the hire charge differences. The revenue's appeal was dismissed, and the order was pronounced in open court.
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