2012 (8) TMI 1143 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) for AY 2007-08; Addition under u/s 68 of Income-tax Act, 1961; Addition on account of low gross profit.

Addition under Section 68:
The assessee raised twelve grounds in the appeal, focusing on the addition made under Section 68 of the Income-tax Act, 1961 and low gross profit. The Assessing Officer required the assessee to produce creditors within a short timeframe, which the assessee found inadequate. The counsel argued that given sufficient time, the assessee could provide the necessary evidence. The Tribunal noted that the time provided was insufficient, indicating that the opportunity was not adequate for the assessee to comply.

Addition on Account of Low Gross Profit:
Regarding the addition for low gross profit, the counsel contended that the Assessing Officer did not properly consider the facts and the decline in gross profit rate. The Tribunal observed that while a low gross profit rate could prompt an inquiry, it alone cannot justify an addition. The Assessing Officer did not establish the need to reject the books of account under Section 145. Consequently, the Tribunal set aside the order related to the gross profit addition, directing the Assessing Officer to reexamine the books of account and provide a fair opportunity for the assessee to be heard before making any determination.

In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes, emphasizing the importance of providing adequate opportunities for the assessee to present their case.