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TMI Blog2013 (7) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has erred in law and on facts in deleting the addition of ₹ 24,12,680/- on account of low Gross Profit, made by the A.O. after rejecting the books of account. ii) On the facts and circumstances of the case, the Ld.Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. iii) It is, therefore, prayed that the order of the Ld.Commissioner of Income tax (A) may be set aside and that of the Assessing Officer be restored. 2. During the course of hearing, an additional ground was also raised by the Revenue, i.e. the Ld.CIT (Appeals) has erred in holding that the books of the appellant could not be rejected without any specific basis. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out by the AO. Under such circumstances, ld.CIT(A) is justified in deleting the addition made on the basis of rejection of books of accounts. 7. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. It is observed by the AO that the assessee is engaged in manufacturing of Aluminum drawn-pipe. It is also observed by the AO that the assessee had maintained the stock register but some notings could not be explained. It is also observed by the AO that the stock register was maintained with all notings in pencil. It is observed by the AO that there is abrupt fall in the gross profit. The explanation of the assessee for fall in gross profit was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld.A.R. for the following reasons:- ( i) It is sent hat the A.O. has made an addition of ₹ 24,12,680/- on account of low gross profit. However, the A.O. has failed to find specific defects in the books of accounts of the appellant. It is also noticed that the various methods applied by the A.O. to work out the gross profit are sheer extrapolations, concoction and formulations without any scientific basis. In my considered view the books of the appellant cannot be rejected without finding specific defects. The appellant in this regard has rightly placed reliance on the cases of CIT vs Smt.Poonam Rani 326 ITR 223 (Del.), CIT vs Vikram Plastics Others 239 ITR 161 (Guj.) ( ii) The bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished goods, scrap and left over raw material. As these materials were not utilized for manufacturing and accordingly in my considered view, the appellant was not required to maintain stock register in respect of these parties. However, as a matter of abundant precaution the appellant has maintained stock register in respect of these parties also. Perusal of various annexures vide which the job work was formalized by the appellant reveals that the appellant is having complete records of raw materials received from the principals and return of unutilized raw material, finished goods and scrap to the principals. In the face of overwhelming and clinching evidences I am inclined to agree with the contentions of the A.R. that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riation. It is settled proposition of law that for rejection of books of accounts, the AO is required to demonstrate specific defects in the books of accounts produced by the assessee and also as to how the books of accounts produced by the assessee is not giving clear picture of the profit earned from the business activity. In the absence of such finding, we are of the view that books of accounts cannot be rejected and the addition cannot be sustained on the basis of such rejection of books of accounts. Therefore, grounds of Revenue s appeal are hereby rejected. 8. In the result, the appeal of the Revenue is dismissed. Order pronounced in Open Court on the date mentioned hereinabove - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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