9911796707
TMI Blog2023 (6) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year. However, he went to reject the books of the assessee and made GP addition on account of absence of any justification given by the assessee for fall in GP ratio in the impugned year, which was 5.7% as opposed to the GP shown by the assessee in the preceding year i.e. 11.14%. Therefore, there is no cause and effect relationship between the defect found by the AO and the addition made by him. AO rejected the book results as unreliable, but as rightly pointed out by the Ld.CIT(A) no specific defect has been pointed out by the AO in the books of the assessee. CIT(A) rightly said that the AO has failed to take note of the business circumstances in which the assessee operates, being an exporter of cotton garments wherein he has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2022. Thereafter, the appeal of the Revenue was fixed for hearing from time to time i.e. on 10.1.2023, 11.1.2023, 15.2.2023, 27.2.203, 6.3.2023, 5.4.2023, 15.5.2023 and lastly on 5.6.2023. However, in none of the occasions, the assessee or his authorized representative appeared in the matter. On 15.5.2023, the Bench passed the following order giving last opportunity to the assessee to appear in defense in the Revenues appeal on 5.6.2023. Matter was recalled for hearing vide order in MA No.47/Ahd/2020 dated 12.10.2022 being earlier dismissed on account of Low Tax Effect involved. It was pointed out that the Department's appeal fell in the exception clause to the CBDT Circular in dealing with withdrawal of appeals on account of low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below. A perusal of the order of the AO at para-2.4 reveals that during the course of assessment proceedings, the AO had noted that two Annexure-I were attached to tax audit report revealing different figures of gross GP earned by the assessee during the year, and both were signed by the tax auditors; that while one annexure revealed GP of Rs. 2.65 crores against turnover of Rs. 49.33 crores, the other annexures revealed GP of Rs. 1.42 crores against the same turnover i.e. Rs. 49.33 crores. When the assessee was confronted with the same, the assessee submitted that the difference in GP was on account of the difference in treatment of expenses as direct and indirect in both annexures for calculating GP, while NP remained the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at para- 8.2 of his as under: 8.2 I have carefully considered the facts of the case, assessment order and submission made by the appellant. The AO made the impugned disallowance by holding that there was a difference of Rs. 1,22,09835/- in the figures of gross profit as pr Annex.1, Part-B filed by the appellant in the audit report. It was also held by the AO that there was a fall in GP of 5.77% during the year under consideration and that 2 annexures had been prepared by the appellant to inflate the gross profit. The AO therefore, disallowed 2% of the turnover i.e. Rs. 98,66,323/- and added it to the total income of the appellant. The appellant on the other hand has contended that there was no difference or discrepancy in the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed to the GP shown by the assessee in the preceding year i.e. 11.14%. Therefore, there is no cause and effect relationship between the defect found by the AO and the addition made by him. Even if considering that taking note of the two figures of GP and the fall in GP as compared to preceding year, the AO rejected the book results as unreliable, but as rightly pointed out by the Ld.CIT(A) no specific defect has been pointed out by the AO in the books of the assessee. Also as rightly pointed out by the Ld.CIT(A) the AO has failed to take note of the business circumstances in which the assessee operates, being an exporter of cotton garments wherein he has noted there is wide variation in margins. We therefore agree with the Ld.CIT(A) that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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