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TMI Blog2012 (8) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... as assessee manufactures grey cloth which is used for dress material whereas the grey cloth manufactured by other firm used for comparison is used for sarees - against revenue. Disallowance of telephone & vehicle expenses - Held that:- CIT(A) considered the disallowance of 20% to be on higher side and therefore restricted the disallowance to 10% - no interference is called for in the order of the CIT(A) - against revenue. - ITA No.371/Ahd/2010 - - - Dated:- 22-6-2012 - S/SHRI MUKUL KUMAR SHRAWAT, AND ANIL CHATURVEDI, JJ. Revenue by: Shri B.L. Yadav Assessee by: Shri Rases B. Shah O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: This appeal is by the Revenue against the order of the CIT(A)-V, Surat dated 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance apart from gross profit addition of Rs.21,01,696/-. 4. During the course of assessment proceedings, the AO noticed that assessee has shown GP @ 5.47% as against 5.16% shown in immediately preceding A.Y.2004-05. For A.Y2003-04, the GP was 12.85%. The AO observed that there was fall in GP as compared to that of A.Y.203-04 and as compared to the industry average of 8 to 13%. He observed that though the assessee and another concern by the name Deepak Textiles were working in similar business environment, were having comparable turnover, the GP shown by Deepak Textile was 11.10% was compared to 5.47% of the assessee. The assessee was asked to explain the fall in GP. The contention of the assessee were not accepted and the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s right in rejecting the book results of the assessee u/s.145(3) for being incomplete and inaccurate. In these circumstances, the ld.DR submitted that the AO has fairly estimated the GP and therefore, rightly made addition of Rs.21,01,696/-. The learned DR therefore urged that the order of the AO be sustained. 7. On the other hand, learned AR submitted that the AO rejected the books of accounts mainly based on the comparison of book results with another firm. The assessee had produced the relevant books and quantitative details of raw material and finished goods. The AO has not pinpointed any material defect or deficiency in the books of accounts. The AO had asked the AO to make available the various data used by him for comparison but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges claimed was nearly double of that of Deepak Textiles. From the machinery details provided by the assessee, the AO observed that there was minimum suppression of production of 50,000 kgs. of yarn. For all these reasons, the AO concluded that the book results shown by the assessee were not reliable and correct and therefore he invoked the provisions of sec. 145(3) and rejected the books of accounts for being incomplete, inaccurate and not reflecting correct state of affairs. After rejecting the books, the AO took the average of GP for A.Y.2003-04 and 2004- 05 and estimated GP @10%. The difference between the estimate rate of GP and GP rate @5.4% was added on estimated basis. It is undisputed fact that the AO has simply made comparison of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted the decision and not preferred any appeal. In view of the foregoing facts, we are of the considered view that the CIT(A) has rightly deleted the addition made by the AO, and therefore the order of the CIT(A) does not call for any interference. In view of these facts, the ground of the Revenue s appeal is dismissed. 9. With reference to second ground of the Revenue s appeal regarding disallowance of telephone etc. the ld.DR relied on the order of the AO. The learned AR, on the other hand, supported the order of the CIT(A). 10. We have heard rival submissions and perused the material on record. The AO had treated 1/5th of expenses of telephone and vehicle expenses to be of personal in nature and thus disallowed Rs.90,179/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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