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Issues involved:
1. Appeal against order of AO for block period under s. 158BD of the IT Act. 2. Addition of undisclosed income based on GP rate for specific assessment years. 3. Justification of addition based on trading results and GP rate. 4. Legitimacy of addition on protective basis for loan received. Analysis: 1. The appeal was filed against the AO's order for the block period under s. 158BD of the IT Act. The assessee raised 8 grounds of appeal, but some were not pressed during the hearing and were dismissed accordingly. 2. The main issue was the addition of undisclosed income based on the GP rate for specific assessment years. The AO applied a GP rate of 1.37% for these years, similar to the rate declared by the assessee for a previous year. The assessee argued that tough market competition caused the decline in GP rate, and no incriminating documents were found to suggest otherwise. 3. After considering the submissions and relevant material, the Tribunal found in favor of the assessee. It was noted that the assessee maintained regular books of account, and all purchases and sales were properly recorded. The Tribunal referred to a similar case involving Sunil Agarwal, where such additions were deemed beyond the scope of Chapter XIV-B. Therefore, the Tribunal held that the AO exceeded jurisdiction by disturbing trading results, and the additions were deleted. 4. Another issue was the addition on a protective basis for a loan received. The AO added Rs. 45 lakhs, considering it part of a larger amount added in another case. However, the Tribunal found that the loan from M/s Nice International was genuine, as established in the case of Sunil Agarwal. The Tribunal referred to specific findings and observations in that case, leading to the deletion of the addition in the present appeal. In conclusion, the Tribunal allowed the appeal in part, ruling in favor of the assessee on both the undisclosed income addition based on GP rate and the protective basis addition for the loan received.
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