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Issues:
1. Addition to gross profits made by the ITO and deleted by the AAC for the assessment years 1971-72 and 1972-73. Detailed Analysis: The appeals before the Appellate Tribunal ITAT BOMBAY revolved around the additions to the gross profits made by the Income Tax Officer (ITO) for the assessment years 1971-72 and 1972-73, which were subsequently deleted by the Assistant Commissioner of Income Tax (AAC). The assessee, engaged in manufacturing and sales of Cardboard boxes and labels, faced challenges regarding the turnover and declared gross profits for both years. The ITO rejected the book results provided by the assessee, citing lack of proper stock maintenance for the manufacturing department and incomplete stock position records for the sales department. Consequently, the ITO estimated higher turnovers and profits, leading to significant additions to the income for both years. Upon appeal, the AAC found no grounds for rejecting the book results or making additional additions to the income. The Tribunal noted that the Department had previously accepted the assessee's books without issue for the initial two years of business. The turnover and gross profit rates declared for the current years were substantially higher than the earlier years, indicating business growth. Despite the lack of detailed stock accounts, there was no evidence of sales suppression or expense inflation by the assessee. The Tribunal agreed with the AAC's decision, emphasizing that the ITO lacked justification for the additional income additions. Even considering the provisions of section 145(1) of the Income Tax Act, the Tribunal found no basis for warranting any further additions to the trading results disclosed by the assessee. Consequently, the Tribunal upheld the AAC's order and dismissed the appeals, deeming them meritless.
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