2023 (9) TMI 321 - AT - Income Tax

GP rate estimation - Since the factory is closed from 17.09.2013 the Counsel showed his inability stating that all the book of accounts and documents are in the premises and, therefore, could not be produced and AO applied GP rate of 12.8% and made addition - CIT(A) deleted addition - HELD THAT - It is true that at the assessment stage the assessee did not produce books of account and related documents/ evidences but it is equally true that before the first appellate authorities the assessee submitted all the evidences alongwith books of account. It is an undisputed fact that the CIT(A) called for a remand report directing the AO to examine the book of accounts and other related documents. We find that not only the AO examined the book of accounts alongwith bills and vouchers but also accepted the same. On these facts we do not find any reason to interfere with the findings of the CIT(A). The ground No.1 is dismissed. Addition of miscellaneous expenses - CIT(A) restricted part addition - HELD THAT - CIT(A) has restricted the disallowance considering the facts of the case to Rs. 3,50,000/- which calls for no interference. Appeal of the revenue is dismissed.

Summary

Issues involved:
The issues involved in this case are the deletion of addition of Rs. 6,86,84,246 and the restriction of disallowance of Rs. 3,50,000 made on account of miscellaneous expenses.

Deletion of addition of Rs. 6,86,84,246:
The assessee, engaged in the business of manufacturing electronics goods, faced scrutiny assessment due to a decrease in GP rate. The AO found a discrepancy in the GP rate compared to the previous year and made an addition of Rs. 6,86,84,246. The assessee, unable to provide documents as the factory was closed, later submitted all evidences before the CIT(A). The CIT(A) called for a remand report and, after verifying the documents, deleted the additions made on account of the low GP rate. The Tribunal upheld the CIT(A)'s decision, stating that the AO had examined the books of accounts and accepted the evidences, thus dismissing the appeal of the revenue.

Restriction of disallowance of Rs. 3,50,000:
The AO disallowed Rs. 7,00,000 out of miscellaneous expenses, freight transport, distribution expenses, and repair and maintenance expenses. The CIT(A) restricted the disallowance to Rs. 3,50,000 after considering the facts of the case. The Tribunal found no reason to interfere with this decision, leading to the dismissal of the appeal of the revenue.

Separate Judgment:
No separate judgment was delivered by the judges in this case.