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TMI Blog2017 (9) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the trading account of the units with whom the AO had compared assessee’s account did not include certain expenses such as bardana, Jhonk, Mandi Fees and Purchase tax etc. Thus the action of the ld. CIT(A) for adopting the average GP rate of 10.58% shown by the comparable cases was not justified, particularly when, he had not also given any reason for not accepting the GP rate applied by the AO at 9%. Therefore, we modify the order of the ld. CIT(A) and direct the AO to apply the GP rate of 9% instead of 10.58% applied by the ld. CIT(A) and work out the addition, if any. X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of assessment proceeding, the AO noticed that the assessee had shown gross profit ratio of 3.55% on the total turnover of ₹ 4,09,56,553/- and net profit ratio of 0.06%. He also noticed that the other units engaged in the similar trade of the same vicinity had shown gross profit ratio hovering between 8% and 12%. The AO observed that the sugarcane purchased by the assessee was ₹ 20/- to ₹ 30/- per quintal higher than the purchases shown by the other similar units in the same vicinity. The AO pointed out that almost every page of the purchase register was tampered especially in the month of February and March 2013 in which the variation in the price of sugarcane was more. He also pointed out certain other d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 5(F) The assessee has shown total gross receipts of ₹ 4,09,56,553/-. On applying GP @ 9%, the gross profit comes to ₹ 36,86,089/- while the assessee has shown a gross profit of ₹ 14,53,956/-. Thus the difference of ₹ 22,32,133/- (3686089-1453956) is treated as more gross profit earned by the assessee. The assessee in the profit and loss account has debited several expenses. Though in the absence of supporting documentary evidences these expenses are also unverifiable yet it is presumed that the assessee firm must incurred certain expenses As I have estimated gross profit rate of 9% hence no further disallowance has been made and giving the full expenditure booked in P&L account and made an addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his own or a comparative figures of the G.P. rate with other units in the vicinity. He has relied on jurisdictional High Court decision in the case of Ram Prakash vs CIT [1983] 15 taxman 533. In this case, the jurisdictional High Court pronounced that profit could be worked out in the light of earlier years of the assessee. The jurisdictional High court's decision may not be applicable to the appellant since the factual matrices in both cases are different. For example, the exemplars of the case relied on were from different cities (liquor business) and not from the vicinity. In the instant case the AO has compared exemplars of the same vicinity, therefore the comparison of result is more accurate. The AO here has compared the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not included by the comparable cases. Therefore, the enhancement made by the ld. CIT(A) by applying GP rate of 10.58% was not justified. 8. In his rival submissions the ld. Sr. DR supported the impugned order passed by the ld. CIT(A) and further submitted that the AO applied the GP rate which was lower than the GP rate shown by the comparables. Therefore, the enhancement made by the ld. CIT(A) was fully justified. 9. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the AO worked out the average GP rate of the comparable units which were working in the same line and vicinity at 10.58%, and after considering this fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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