9911796707
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Issues:
Challenging additions made by AO and confirmed by CIT(A) based on rejected books of account for the assessment year, application of gross profit rate, lack of justification for additions. Analysis: The appeal was filed against the CIT(A)'s order for the assessment year 1995-96. A survey conducted in 1995 led to the rejection of books of account by the AO based on papers found, although the Department failed to prove these papers were not entered into regular accounts. The CIT(A) rejected the books citing lack of fully vouched sales, purchases, and stock registers. The AO applied a 22% gross profit rate on sales without sufficient justification, which was confirmed by the CIT(A). Upon review, the Tribunal found the additions made by the AO and upheld by the CIT(A) to be unjustified. It was emphasized that additions should be based on reasonable grounds, such as comparing with past history or similar cases. The Tribunal noted the AO did not conduct this analysis and failed to identify specific defects in the books of account. Consequently, the Tribunal directed the AO to accept the books of account and allowed the appeal raised by the assessee on this ground. Other grounds of appeal by the assessee were not pursued and were thus dismissed as not pressed. As a result, the appeal was partly allowed by the Tribunal, overturning the additions made by the AO and upheld by the CIT(A) due to lack of proper justification and failure to identify specific defects in the books of account.
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