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TMI Blog2020 (7) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... per meter. When the purchase cost is rising both in terms of rate per meter in US$ as well as the conversion rate of US$ into Indian rupees and the sale is mainly to the sister concerns that too without any agreed sale price in advance, the small addition made by the AO in the range of about 1% of the total sale value is neither excessive nor unreasonable. Since no explanation was offered by the assessee before the AO regarding fall in GP rate AO has not estimated the income by totally disregarding the book results and he has only made an estimated addition because the assessee could not explain the reasons behind fall in GP rate particularly when the major sales to the extent of 95% are to the related parties Particularly this fact that 95% of sales were made to related parties at the old selling rate in spite of increase in purchase rate both in terms of price per meter in US$ and also the exchange rate of dollars, we hold that no interference is called for in the order of CIT(A). - Decided against assessee. - ITA No.1705/Bang/2019 - - - Dated:- 9-7-2020 - Shri A. K. Garodia, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Assessee : Shri. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case. 8. The appellant denies itself liable to be charged interest under section 244A and 234D of the Act on the facts and circumstances of the case. 9. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal. 10. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered. 3. In course of hearing, the assessee has also raised 3 additional grounds which are as under: 1. The authorities below failed to appreciate tha,t no addition on an estimated basis could have been made without rejection of books and accordingly, the addition made is liable to be deleted on the facts and circumstances of the case. 2. The appellant craves leave of this Hon'ble Tribunal, to add, alter, delete, amend or substitute any or all of the above grounds of appeal as may be necessary at the time of hearing. 3. For these and other grounds that may be urged at the time of hearing of appeal, the appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity. 4. In cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was expecting that the price will stabilize, the assessee did not raise the selling price because the selling price was earlier agreed orally. He submitted that under these facts, no addition should be made. He also submitted that books were not rejected by the AO and therefore, without rejecting the books of accounts, such an addition cannot be made and in support of his contention, reliance was placed on the Tribunal order rendered in the case of DCIT Vs. M/s. Mandya District Co-op. Milk Producers Societies Union Ltd., in ITA No.1512/Bang/2017 dated 20.02.2020. He submitted a copy of this Tribunal order and in particular, our attention was drawn to para 3 of this Tribunal order. Learned DR supported the orders of authorities below. 6. We have considered the rival submissions. It is noted by the AO on page 2 of the Assessment Order that the percentage difference for exchange rate change is only 10 to 15%, but the actually dip in the gross profit margin is 44% and the actual net increase in the cost of materials is in the range of 29% to 34%. The AO made additions of ₹ 25 lakhs on this basis that since the assessee has not submitted satisfactory explanation for such fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase cost is rising both in terms of rate per meter in US$ as well as the conversion rate of US$ into Indian rupees and the sale is mainly to the sister concerns that too without any agreed sale price in advance, the small addition made by the AO in the range of about 1% of the total sale value is neither excessive nor unreasonable. Since no explanation was offered by the assessee before the AO regarding fall in GP rate, the Tribunal order cited by learned AR of the assessee is not applicable in the present case. Moreover, the ratio of this Tribunal order is this that income cannot be estimated if the books are not rejected. In the present case, the AO has not estimated the income. He has made an estimated addition only because the assessee could not explain the reasons regarding fall in GP rate. Rejection of books of accounts is a pre-requirement if the books results are totally ignored and the income is estimated by the AO but in the present case, books results are not totally ignored by the AO and he has assessed the income on estimate basis by totally disregarding the book results but in the present case, the AO has not estimated the income by totally disregarding the book resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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