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TMI Blog2020 (7) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... d. We are of the further considered view that GP ratio is required to be estimated keeping in view the historical background from AYs 2007-08 to 2011-12. So, we deem it fit to adopt the net gross profit ratio for the year under assessment by taking average of the current year as well as four preceding assessment years i.e. AYs 2007-08, 2008- 09, 2009-10 2010-11 which comes to 11.31%. AO is to quantify the gross profit ratio accordingly and to recompute the addition to be made in this case. We are of the considered view that since the Bench has preferred to proceed with GP addition on the basis of average of the current year and four earlier assessment years, the remaining other additions made by AO/confirmed by the ld. CIT (A) on account of disallowance of commission, on account of fines penalties and on account of interest on FDR respectively do not call for any separate addition, hence deleted. - Appeal filed by the assessee is allowed. - ITA No.3021/Del./2016 - - - Dated:- 2-7-2020 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Smt. Rano Jain, Advocate, Shri Venketesh M. Chourasia, Advocate For the Revenue : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of ₹ 91,510/- made by the ld. AO on account of interest on FDR. (ii) That the said addition has been confirmed by rejecting the fact that the difference in the figure of interest is due to the different method of accounting followed by the bank and the assessee. 2. Briefly stated the facts necessary for adjudication of the issue at hand are : assessee firm is into the business of trading and installation of UPS and inverter systems. Assessee was called upon to explain the reason for the low net profit rate declared vis- -vis other assessees into the similar trade. Finding the reasons given by the assessee not tenable and finding defects in the books of account, Assessing Officer (AO) proceeded to estimate the gross profit at 12.78% by rejecting the books of account under section 145 (3) of the Income-tax Act, 1961 (for short the Act ), which comes to ₹ 2,98,63,007/-, consequently made addition to the tune of ₹ 41,70,135 being the difference in the declared gross profit by the assessee. AO further made addition of ₹ 13,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010-11. This factual position has not been controverted by the ld. DR for the Revenue. 7. We have gone through the order dated 13.08.2009 (supra) passed by the coordinate Bench of the Tribunal which contains the identical facts wherein the AO had applied the GP rate of 12.78% after rejecting the books of account u/s 145 (3) of the Act and keeping in view the historical background of the assessee made addition of ₹ 86,70,755/-. Coordinate Bench of the Tribunal decided the issue in controversy by returning following findings :- 5. We have considered the rival arguments made by both the sides and perused the orders of the Assessing Officer and CIT(A). We have also considered the various decisions cited before us. It is an admitted fact that the assessee, in the instant case, has not maintained any stock register so as to give the details of date-wise purchase and sales of items traded and the closing stock balance position on a particular day. Similarly, notices u/s 133(6) were issued to various sundry creditors which were returned unserved on the ground that either they have left or the premises are locked or the addresses were insufficient. It is also an admitted fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be deleted. The grounds raised by the assessee are accordingly partly allowed. 8. Undisputedly, during the year under assessment also, AO estimated gross profit ratio of 12.78% by following gross profit ratio earned by the assessee in 2009-10 after rejecting the books of account u/s 145 (3) of the Act. Ld. AR for the assessee contended that the issue at hand is covered for all intent and purpose having been decided by the Tribunal in AY 2010-11 in assessee s own case in ITA No.2109/Del/2015. 9. We have perused the order passed by the coordinate Bench of the Tribunal in assessee s own case for AY 2010-11 (supra) wherein the AO/CIT (A) have estimated/confirmed GP rate of 8.22% by rejecting the books of account u/s 145(3) of the Act and the Tribunal has directed to take average of the current year as well as two immediately preceding assessment years to estimate the gross profit by upholding the rejection of books of account u/s 145 (3) of the Act. 10. We are of the considered view that earning of GP/NP ratio at any business house is not a mechanical process to be consistent in all the years as it depends upon numerous factors prevailing during the particular asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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