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TMI Blog2010 (10) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT (A) has erred in sustaining trading addition of ₹ 698606/- in the declared results by the ld. A.O. b) The ld. CIT (A) had erred in sustaining the action of ld. A.O. in rejecting regular books of accounts maintained by the appellant. c) The Ld. CIT (A) had erred in sustaining application of Gross Profit Rate in the case of appellant. d) The ld. CIT (A) had erred in sustaining application of gross profit on transfer to appellant s own unit. e) The entire addition being bad in law and bad on facts deserves to be deleted. 2. The ld. CIT (A) has erred in confirming interest charged U/s 234 B and 234 C. The levy of aforesaid interest is patently invalid and unjustified. 3. The ld. CIT (A) has erred in not accepting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom one proprietary concern of the assessee to another proprietary concern of the assessee does not amount to sale. If this amount is reduced from the total sales, which did not result into profit as stock was transferred at cost, the gross profit ratio would work out at 14.49%. This ratio is better than last year and probably the best ratio of immediately three preceding years. For the sake of ready reference the explanation of the assessee is reproduced below. According to the comparatives in trading account gross profit ratio is 11.44% against 11.89%, 12.12% or 14.34% in the last year 2004, 2005 and 2006 respectively. We request your honor that this GP ratio is current relevant period has shown this misleading result. In fact assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 50-75 lacs has been included in the total turnover where as this is not the turnover / sales of the assessee, so percentage GP were looking lower. Actually gross profit margin in the relevant period is 14.49% which is higher than the last year results. So kindly accept the declared results of the assessee. 2.1. The Assessing Officer considered the facts of the case and the submissions made before him. It is mentioned that the assessee did not maintain day to day stock book. Therefore, the books of account were rejected and the gross profit ratio was adopted at 14.34% leading to addition of ₹ 6, 98,606/- to the total income of the assessee. The Ld. CIT (A) confirmed this action. 3. The case of the learned counsel befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails. Further, the expenses incurred were not fully verifiable and, therefore, it was not feasible to work out profits correctly on the basis of the books of account. Thereafter, he dealt with the reasonableness of the profit estimated by the Assessing Officer and held that the ratio adopted by the Assessing Officer was fair and reasonable. He heavily relied on the orders of the lower authorities. He also placed reliance on the decision of Hon ble Bombay High Court in the case of Dhondiram Dalichan Vs CIT (1971) 81 ITR 609. 5. We have considered the facts of the case and submissions made before us. The case of the Assessing Officer, which has been confirmed by the Ld. CIT (A), is that (a) sale of stock by one proprietary concern t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase for the purpose of estimating reasonable profits. In absence thereof, the results of earlier years are the only guiding factor in estimating profits. Since the results of this year are better than results of earlier years, the addition sustained by the Ld. CIT (A) was not justified. Accordingly ground no.1 is allowed as indicated above. 6. Ground No.2, regarding charging of interest U/ss 234B, 234C was stated to be consequential in nature. The Assessing Officer shall revise the amount of these interests at the time of giving effect to this order. 7. Ground Nos. 3 4 regarding jurisdiction of the Assessing Officer and the levy of costs were not pressed by the learned counsel. 8. No decision is required on ground no.5, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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