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TMI Blog2015 (6) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition. See Aluminium Industries (P) Ltd. Vs. CIT (1995 (2) TMI 437 - GAUHATI HIGH COURT). - Decided against revenue. - I.T.A. No. 2792/DEL/2013 - - - Dated:- 11-6-2015 - Shri H.S. Sidhu and Shri J.S. Reddy, JJ. For the Petitioner : Smt. Parvinder Kaur, Sr. DR For the Respondent : Sh. Amit Goel, CA ORDER PER H.S. SIDHU, JM Revenue has filed this appeal against the Order dated 27.2.2013 passed by the Ld. Commissioner of Income Tax (Appeals)-XXIII, New Delhi pertaining to assessment year 2009-10 on the following grounds:- 1. On the facts and on the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 4,31,41,035/- made by the AO. 2. The assessee craves leave to add, alter or amend any of the grounds of appeal before or during the course of the hearing of the appeal. 2. The brief facts of the case are that the assessee firm filed its return of Income for the Assessment Year 2009-10 on 23.09.2009 disclosing loss of ₹ 3,63,85,885/-. The assessee is engaged in the business of manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4,31,41,039/-) and computed the net taxable income at ₹ 67,55,154/-. 3. Against the aforesaid assessment order of the Assessing Officer, Asseessee appealed before the Ld. First Appellate Authority, who vide impugned order 27.2.2013 has allowed the appeal of the assesee by deleting the addition of Rs. ₹ 4,31,41,039/-. 4. Aggrieved by the aforesaid order dated 27.2.2013, Revenue is in appeal before the Tribunal. 5. At the time of hearing Ld. Departmental Representative has relied upon the order of the Assessing Officer and reiterated on the contentions raised in the grounds of appeal filed by the Revenue. 6. On the other hand, Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A) and submitted that the order of the Ld. CIT(A) may be upheld. In support of his contention, he filed the synopsis. For the sake of convenience, the synopsis are reproduced hereunder:- The assessee is a partnership firm engaged in the business of manufacturing of enameled wire, submersible wire and bare copper wire etc. Return of income was filed by assessee declaring loss of ₹ 3,63,85,885/-. The A.O. completed the assessment at income of ₹ 67,55, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 489 Century Tiles Ltd v JCIT (2014) 51 taxman.com 515 (Ahd. ITAT) ITO v Sani Trade Agency (Ahd. ITAT) ITA No. 3524/Ahd/2007 ACIT v. Rushabh Vatika (Rajkot Bench) ITA No. 51 (RJK) 0[2013] The CIT(A) in para 4 to para 4.4 (page No. 15 to Page No. 18 of her order) after elaborate discussion and cogent reasons has rightly deleted the addition made by the A.O. 7. We have heard both the parties and perused the records especially the impugned order dated 27.2.2013, synopsis filed by the Assessee, we find that the assessee before the Ld. CIT(A) has submitted that the return of Income was filed on 23.09.2009 declaring a loss ₹ 3,63,85,885/-. When AO has selected the case of assessee and assessee has filed the computation of income along with audited accounts and tax audit report for the year during the course of assessment proceedings along with other details called for from time to time. The assessee is a partnership firm engaged in the manufacture of enamelled and submersible wire, bare copper wire, etc. During the course of assessment proceeding the AO had raised query as to the gross loss on operations amounting to ₹ 21580361/- calculated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prevailing at the London Metal Exchange, which shows that the average rate of April 2008 was USD 8684.93, which fell to USD 3717.00 in November 2008, and for the month of March 2009 was at USD 3749.75. The assessee has pointed out that, as compared to the earlier year, its sales increased in quantity from 15,27,065/- kgs to 16,40,902 kgs but in value fell from ₹ 64,44,74,892/- to ₹ 59,07,03,526/- due to fall in prices. 7.2 We note that the CIT(A) observed that the assessee's contention regarding loss incurred on account of forward contracts entered into for purchase of copper has also been verified with reference to the booking orders placed and the corresponding purchases made. The assessee has shown with reference to the bookings made and the deliveries taken, that it paid an excess value of ₹ 2,45,85,874/- on account of forward contracts entered into between 16.07.2008 and 29.09.2008. To give an example, the assessee had contracted to purchase 18 MT of copper on 29.07.2008 at a rate of ₹ 434.25, but when delivery was taken on 02.11.2008, the market rate was only ₹ 221.73. Copies of purchase bills in respect of the forward contracts with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade solely on the ground that it was low without giving a specific finding that the accounts of the assessee were not correct and complete, or that the income could not be properly determined and deduced from the accounting method employed by the assessee, is not justified. We find considerable cogency in the finding of the Ld. CIT(A) in the impugned order that the mere fact that there was a less rate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition. In this regard, Ld. CIT(A) has referred the decision in the case of Aluminium Industries (P) Ltd. Vs. CIT (1995) 80 Taxmann 184 (Gauhati). After considering the evidences filed before Ld. CIT(A) regarding the continuous fall in the prices of copper, and after verifying the quantitative tally of consumption of raw material and manufacture of finished goods, the addition made on account of estimation of gross profit, has rightly been deleted by the Ld. CIT(A). In the background of the aforesaid detailed discussions, we find that Ld. CIT(A) has rightly deleted the addition of ₹ 4,31,41,035/- entirely on the fall in gross profit rate. Therefore, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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