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TMI Blog2013 (12) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2012 in I.T.A. No.156/A/2012 for Assessment Year 2005-06 and I.T.A. No.157/A/2012 for Assessment Year 2006-07. 3. The ITAT has upheld the order of CIT (A), by which the CIT (A) has set aside the order of the A.O. making addition of Rs.4,35,51,668/- by increasing the gross profit to 26.88% on the total turnover, as against the gross profit shown by the assessee at 22.40% for the A.Y 2005-06; and addition of Rs.2,71,87,628/- by increasing the gross profit from 22.42% as disclosed by the assessee to 26.90% on the total turnover of Rs.60,71,16,199/- for the A.Y. 2006-07. 4. The department has preferred these appeals on the questions of law, as follows:- "1 Whether the Hon'ble ITAT has erred in law and on facts in deleting the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 70 of 2013 (Commissioner of Income Tax (Central) Kanpur vs. M/s Carpet Palace, Rajpura, Bhadohi) decided by us on 9.7.2013. 6. In the present case, we find that though the assessment was completed under Section 139 (1) of the Income Tax Act,1961 for the A.Y. 2005-06; and A.Y. 2006-07, search and seizure operations were conducted on 11.2.2009 in the residential and business premises of M/s Carpet International, M/s Carpet International Pvt. Ltd, Bhadohi, its Directors, its partners, its sister concerns, after which assessments were made for the block period beginning for the assessment years 2003-04 to 2009-10. 7. The Assessing Officer (AO), Commissioner of Income Tax (A) and the ITAT have recorded findings for the Assessment Years 2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o material was found on which 15% enhancement in profit rate can be said to be justified. The A.O. while making addition on flat rate of 15% in the gross profit did not follow the established guidelines in estimating the income. He did not rely on any comparable case in support of his estimation nor gave any justification to reject the comparable cases cited by the assessee. He was justified in enhancing the G.P. rate. The Tribunal, thereafter, compared G.P. rate with the cases of the business houses carrying on the same business of carpet manufacturing in the same area, furnished before the A.O. and formed an opinion that the assessee's Gross Profit rate of 28.48% could not be enhanced 32.75%. In comparable cases GP declared was very low ..... X X X X Extracts X X X X X X X X Extracts X X X X
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