ACIT, New Delhi V. M/s. ESS EII Cables Co., New Delhi

ITA 2792/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0204 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Assessee Lawyers: AMIT GOEL
• Keywords: Rejection of books of accounts; Depreciation; Diversion of income
• Section: 143(3)

Judgement Text

ITA NO. 2792/ DEL/ 2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 2792 / DEL/201 3 A.Y. : 200 9 - 10 ACIT, CIRCLE - 2 4(1), ROOM N O . 1305 , E - 2, SP MUKHERJEE, CIVIC CENTRE, MINTO ROAD, NEW DELHI VS. M/S ESS ELL CABLES CO., D - 50, 1 ST FLOOR, BASANT LOK, VASANT VIHAR, NEW DELHI (PAN: AAAFE3222A) ( APPELLANT ) (RESPONDENT) DEPARTMENT BY : S MT. PARVINDER KAUR, SR. DR ASSESSEE BY : SH. AMIT GOEL, CA DATE OF HEARING : 1 0 - 0 6 - 201 5 DATE OF ORDER : 11 - 0 6 - 201 5 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THIS APPEAL AGAINST THE O RDER DATED 27 . 2 .201 3 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XXIII , NEW DELHI P ERTAINING TO ASSESSMENT YEAR 200 9 - 10 ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4 , 31 , 41,035/ - MADE BY THE AO . 2. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FIRM FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ON 23.0 9.2009 ITA NO. 2792/ DEL/ 2013 2 DISCLOSING LOSS OF RS. 3,63,85,885/ - . THE A SSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTUR I N G OF ENAMELLED WIRE, SUBMERSIBLE WIRE, BARE COPPER WIRE, ETC. DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER EXAMINED THE CLAIM OF GROSS LOSS OF ( - ) 3.65% AGAINST THE TOTAL TURNOVER OF RS. 59,07,03,526/ - , PARTICULARLY IN VIEW OF THE FACT THAT THE ASSESSEE HAD DISCLOSED GROSS PROFIT AT THE RATE OF 5.48% IN THE EARLIER YEAR. THE ASSESSEE EXPLAINED THAT THE LOSS WAS ON ACCOUNT OF CONTINUOUS FALL I N THE PRICE OF THE PRINCIPAL RAW MATERIAL, COPPER, WHICH HAD AN AVE RA GE COST OF RS. 445 PER KG AT THE BEGINNING OF THE YEAR, AND AN AVERAGE COST OF RS. 233 PER KG AT THE END OF THE YEAR. THE ASSESSEE STATED THAT ITS PURCHASES WERE BOOKED AT THE PRICES PREV AILING ON THE DATE OF ORDER WHEREAS THE PRICES HAD FALLEN SUBSTANTIALLY BY THE TIME DELIVERY WAS TAKEN. THE ASSESSEE ALSO INCURRED HEAVY LOSSES WHERE FORWARD CONTRACTS HAD BEEN BOOKED AT HIGHER PRICES THAN THOSE PREVAILING ON THE DATE OF DELIVERY. THE A SSE SSEE ALSO STATED THAT DIRECT EXPENSES HAD INCREASED, AND HIGHER DEPRECIATION HAD BEEN DEBITED ON ACCOUNT OF INVESTMENTS IN NEW PLANT. THE ASSESSING OFFICER HELD THAT THE FALL IN THE RATE OF COPPER WAS NOT AN ACCEPTABLE REASON FOR INCURRING LOSS AS MONTHWIS E DETAILS OF PURCHASE AND SALE SHOWED THAT THE SALE PRICE WAS LOWER THAN THE PURCHASE PRICE ONLY IN THE TWO MONTHS OF NOVEMBER AND DECEMBER 2008. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE WAS INVOLVED IN SALE AND PURCHASE OF COPPER WITH ITS GRO UP CONCERNS. IN SUCH A SITUATION, THE ASSESSING OFFICER APPREHENDED THE POSSIBILITY OF DIVERSION OF INCOME. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SOLD COPPER SCRAP AT RS. 320 TO 330 PER KG. TO. M/S BOMBAY METAL INDUSTRIES, AN ASSOCIATE CONCER N, AND AT RS. 160 TO 200 PER KG. TO M/S KG METAL AND ALLOYS, ANOTHER SISTER CONCERN. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF GROSS LOSS OF RS. 2,15,80,361/ - , AND ESTIMATED THE GROSS PROFIT AT 3.65% FOR THE YEAR UNDER CONS IDERATION, AT RS. 2,15,60,678 / - AND COMPLETED ITA NO. 2792/ DEL/ 2013 3 THE ASSESSMENT U/S. 143(3) VIDE ORDER DATED 19.12.2011 WHEREIN HE COMPUTED THE GROSS PROFIT @ 3.65% (2/3 RD OF LAST YEAR GROSS PROFIT RATE OF 5.48%) OF THE IMMEDIATELY PRECEDING PREVIOUS YEAR AND AFTER DISALLOWING GROSS LOSS DECLARED OF RS. 2,15,80,361/ - BY THE ASSESSEE AND MAKING HIS OWN CALCULATIONS AND MADE ADDITIONS FOR RS. 2,15,60,678/ - FOR GROSS PROFIT EA RNED (EFFECTIVELY DISALLOWING RS. 4,31,41,039/ - ) AND COMPUTED THE NET TAXABLE INCOME AT RS. 67,55,154/ - . 3 . AGAINST THE AFORESAID ASSESSMENT ORDER OF THE ASSESSING OFFICER, ASSEESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER 27 . 2 .201 3 HAS ALLOWED THE APPEAL OF THE ASSESEE BY DELETING THE ADDITION OF RS. RS. 4,31,41,039/ - . 4 . AGGRIEVED BY THE AFORESAID ORDER DATED 27 . 2 .201 3 , REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5 . AT THE TIME OF HEARING LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND REITERATED ON THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. 6 . ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND SU BMITTED THAT THE ORDER OF THE LD. CIT(A) MAY BE UPHELD. IN SUPPORT OF HIS CONTENTION, HE FILED THE SYNOPSIS . FOR THE SAKE OF CONVENIENCE, THE SYNOPSIS ARE REPRODUCED HEREUNDER: - THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE - BUSINESS OF MANUFACTURING OF ENAMELED WIRE, SUBMERSIBLE WIRE AND BARE COPPER WIRE ETC. RETURN OF INCOME WAS FILED BY ASSESSEE DECLARING LOSS OF RS.3,63,85,885/ - . THE A.O. COMPLETED THE ASSESSMENT AT INCOME OF RS.67,55,154/ - BY MAKING ADDITION OF RS. 4,31,41,035/ - BY ESTIMATING ITA NO. 2792/ DEL/ 2013 4 G.P. RATE OF 3.65%. THE LD. CIT(A) HAS DELETED THE DISALLOWANCE MADE BY THE A.O. THE ASSESSEE IS MAINTAINING PROPER BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE BASED ON ACTUAL STATE OF AFFAIRS AND NOT BASED ON ANY ADHOC G.P.RATE BASIS. THE ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED U/S 44AB OF INCOME TAX ACT. THE ASSESSEE IS MAINTAINING PROPER RECORDS (BOTH, QUANTITY WISE AND AMOUNT WISE) OF OPENING STOCK, PURCHASE, SAL ES AND CLOSING STOCK. ALL THE DETAILS IN RELATION THERETO HAD BEEN FURNISHED BEFORE THE A.O. THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE A.O. WHICH HAS BEEN EXAMINED BY HIM AS ADMITTED BY HIMSELF IN FIRST PART OF THE ASSESSMENT ORDER. THE BOOK OF ACCOUN TS HAVE NOT BEEN REJECTED. NO DISCREPANCIES WHATSOEVER HAS BEEN POINTED BY THE A.O. IN THE BOOKS OF ACCOUNTS OR THE DETAILS FURNISHED BY ASSESSEE. NO DISCREPANCIES IN THE QUANTITY AND AMOUNT OF PURCHASE AND SALES HAS BEEN POINTED OUT BY THE A.O. SIMILARLY NO DISCREPANCY IN THE QUANTITY AND VALUATION OF OPENING AND CLOSING STOCK HAS BEEN POINTED OUT BY A.O. NO DISCREPANCY IN ANY OF THE EXPENSES CLAIMED BY THE ASSESSEE HAS BEEN POINTED BY A.O. UNDER THE CIRCUMSTANCES, THERE WAS NO RATIONALE FOR THE A.O. TO MA KE THE ADDITION. THE A.O. HAS MADE THE ADDITION IN AN ARBITRARY MANNER WITHOUT APPRECIATING THE FACTS OF THE CASE. IT IS A SETTLED LAW THAT A.O. CANNOT MAKE ANY ADDITION BASED ON ESTIMATED G.P. IF THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY HIM. IN FA CT, THE VARIOUS COURTS HAVE HELD THAT MERELY FALL IN G.P. RATE CANNOT BE A GROUND FOR REJECTION OF BOOKS OF ACCOUNTS. IN THE ASSESSEE'S CASE, THE ITA NO. 2792/ DEL/ 2013 5 FACTS ARE EVEN STRONGER IN AS MUCH AS EVEN THE BOOKS OF ACCOUNTS HAVE BEEN DULY ACCEPTED BY A.O. AND HAS NOT B EEN REJECTED. RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS : - CIT V SMT POONAM RANI (DELHI HIGH COURT) 326 ITR 223 (2010) CIT V JACKSONS HOUSE (DELHI HIGH COURT) 198 TAXMAN 385 (DELHI)(2011) DCIT V HANUMAN SUGAR MILLS (P) LTD (ALLAHABAD HIGH COURT) (20 13) 221 TAXMAN 156 MADNANI CONSTRUCTION CORP. LTD. V CIT (2008) 296 ITR 45 (GAUHATI HIGH COURT) CIT V UP STATE FOOD & ESSENTIAL COMMODITIES (2013) 39 TAXMANN.COM 106 (ALLAHABAD) ACIT V HITECH GRAIN PROCESSING PVT. LTD. (ITAT, DELHI) ITA NO. 2885/DE1L201 1 ACIT V ERCON COMPOSITES (2014) ITAT JODHPUR 49 TAXMANN.COM 489 CENTURY TILES LTD V JCIT (2014) 51 TAXMAN.COM 515 (AHD. ITAT) ITO V SANI TRADE AGENCY (AHD. ITAT) ITA NO. 3524/AHD/2007 ACIT V. RUSHABH VATIKA (RAJKOT BENCH) ITA NO. 51 (RJK) 0[2013] THE CIT(A) IN PARA 4 TO PARA 4.4 (PAGE NO. 15 TO PAGE NO. 18 OF HER ORDER) AFTER ELABORATE DISCUSSION AND COGENT REASONS HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE IMPUGNED ORDER DATED 27 . 2 .201 3 , SYNOPSIS FILED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE BEFORE THE LD. CIT(A) HAS SUBMITTED THAT THE R ETURN OF INCOME WAS FILED ON 23.09.2009 ITA NO. 2792/ DEL/ 2013 6 DECLARING A LOSS RS. 3,63,85,885/ - . WHEN AO HAS S ELECTED THE C ASE OF ASSESSEE AND ASSESSEE HAS FILED T HE COMPUTATION OF INCOME ALONG WITH AUDITED ACCOUNTS AND TAX AUDIT REPORT FOR THE YEAR DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALONG WITH OTHER DETAILS CALLED FOR FROM TIME TO TIME. THE A SSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE MANUFACTUR E OF ENAMELLED AND SUBMERSIBLE WIRE, BARE COPPER WIRE, ETC. DURING THE COURSE OF ASSESSMENT PROCEEDING THE AO HAD RAISED QUERY AS TO THE GROSS LOSS ON OPERATIONS AMOUNTING TO RS. 21580361/ - CALCULATED TO BE 3.65% OF THE TURNOVER OF RS. 590703526/ - AS COMPARED TO A GROSS PROFIT OF 5.48% AND 5.47% DECLARED FOR THE IMMEDIATE LY TWO PRECEDING ASSESSMENT YEARS 2008 - 09 AND 2007 - 08 AND CONSEQUENT NET LOSS DECLARED BY THE ASSESSEE. THE ASSESSEE VIDE ITS SUBMISSION DATED 13.9.2011 FILED THE COMPARATIVE GROSS PROFIT AND NET PROFIT CHART FOR THREE YEARS (INCLUDING THE YEAR UNDER AS SESSMENT) WHEREIN THE REASONS FOR DECLARING THE GROSS LOSS ON OPERATIONS AND INCURRING NET LOSS FOR THE YEAR WERE ELABORATED UPON ALONG WITH DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIMS. NO FURTHER QUERIES WERE RAISED BY THE AO ON THE ISSUE NOR WAS ANY S HOW CAUSE GIVEN TO THE ASSESSEE THAT THE ARGUMENTS ADVANCED BY IT EXPLAINING THE LOSS INCURRED WAS NOT ACCEPTABLE TO THE AO THEREAFTER. THE AO THEN FRAMED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT ON 19.12.2011 WHEREIN HE COMPUTED THE GROSS P ROFIT @ 3.65% (2/3 RD OF LAST YEAR GROSS PROFIT RATE OF 5.48%) OF THE IMMEDIATELY PRECEDING PREVIOUS YEAR AND AFTER DISALLOWING GROSS LOSS DECLARED OF RS. 2,15,80,361/ - BY THE ASSESSEE AND MAKING HIS OWN CALCULATIONS / ASSUMPTIONS FIGURES MADE ADDITIONS FOR RS. 2,15,60,678/ - FOR GROSS PROFIT EARNED (EFFECTIVELY DISALLOWING RS. 4,31,41,039/ - ) AND COMPUTED THE NET TAXABLE INCOME AT RS. 67,55,154/ - . ITA NO. 2792/ DEL/ 2013 7 7.1 WE FURTHER FIND THAT THE SCRUTINY ASSESSMENTS HAD BEEN FRAMED IN ITS CASE FOR THE ASSESSMENT YEARS 2006 - 07 , 2007 - 08 AND 2008 - 09, IN WHICH ONLY SOME DISALLOWANCE OUT OF EXPENSES HAD BEEN MADE T HE A SSESSEE HAS ARGUED THAT COMPARING THE MONTH WISE RATES OF PURCHASE AND SALE DOES NOT TAKE INTO ACCOUNT THE VALUE OF OPENING AND CLOSING STOCK AS ALSO OF DIRECT EXPENS ES. THE A SSESSEE HAS SHOWN THAT MERELY COMPARING THE DIFFERENCE OF SALES AND COST OF SALES AND INVENTORIES WOULD SHOW A NOMINAL PROFIT OF RS.82,04,274/ - , BUT AFTER INCLUDING THE MANUFACTURING EXPENSES, THE A SSESSEE INCURRED A GROSS LOSS OF RS. 2,15,80,361/ - , WHICH IS EVIDENCED BY THE AUDITED ACCOUNTS. THE A SSESSEE HAS ALSO POINTED TO THE FACT THAT IN THE IMMEDIATELY SUCCEEDING YEAR, THE ASSESSMENT YEAR 2010 - 11, WITH THE INCREASE IN THE PRICES OF COPPER, THE GROSS PROFIT JUMPED BACK TO 7.5%. IT HAS BEEN' ARG UED THAT THERE WAS A GLOBAL MELT DOWN IN COMMODITY PRICES BETWEEN S EPTEMBER 2008 AND MARCH 2009 FOLLOWING THE COLLAPSE OF BANKS IN THE UNITED STATES. THE ASSESSEE HAS SUBMITTED A CHART OF THE MONTHLY AVERAGE RATES PREVAILING AT THE LONDON METAL EXCHANGE, W HICH SHOWS THAT THE AVERAGE RATE OF APRIL 2008 WAS USD 8684.93, WHICH FELL TO USD 3717.00 IN NOVEMBER 2008, AND FOR THE MONTH OF MARCH 2009 WAS AT USD 3749.75. THE ASSESSEE HAS POINTED OUT THAT, AS COMPARED TO THE EARLIER YEAR, ITS SALES INCREASED IN QUANT ITY FROM 15,27,065 / - KGS TO 16,40,902 KGS BUT IN VALUE FELL FROM RS. 64,44,74,892/ - TO RS.59,07,03,526/ - DUE TO FALL IN PRICES. 7 . 2 WE NOTE THAT THE CIT(A) OBSERVED THAT THE ASSESSEE 'S CONTENTION REGARDING LOSS INCURRED ON ACCOUNT OF FORWARD CONTRACTS EN TERED INTO FOR PURCHASE OF COPPER HAS ALSO BEEN VERIFIED WITH REFERENCE TO THE BOOKING ORDERS PLACED AND THE CORRESPONDING PURCHASES MADE. THE ASSESSEE HAS SHOWN WITH REFERENCE TO THE BOOKINGS MADE AND THE DELIVERIES TAKEN, THAT IT PAID AN EXCESS VALUE OF RS. 2,45,85,874/ - ON ITA NO. 2792/ DEL/ 2013 8 ACCOUNT OF FORWARD CONTRACTS ENTERED INTO BETWEEN 16.07.2008 AND 29.09.2008. TO GIVE AN EXAMPLE, THE ASSESSEE HAD CONTRACTED TO PURCHASE 18 MT OF COPPER ON 29.07.2008 AT A RATE OF RS. 434.25, BUT WHEN DELIVERY WAS TAKEN ON 02.11.2008, THE MARKET RATE WAS ONLY RS. 221.73. COPIES OF PURCHASE BILLS IN RESPECT OF THE FORWARD CONTRACTS WITH THE SUPPLIERS M/S STERLITE INDUSTRIES AND M/S HINDALCO HAVE BEEN FILED BY THE ASSESSEE . T HE EXCESS PRICE PAID ON ACCOUNT OF FORWARD CONTRACTS ALONE WORKS OUT TO RS. 2,45,85,874/ - . THE ASSESSEE HAS ALSO FURNISHED EVIDENCE OF CANCELLATION OF A FORWARD CONTRACT FOR PURCHASE OF 25 MT OF COPPER WHICH WAS CANCELLED WITHOUT DELIVERY RESULTING IN A LOSS OF RS. 38,70,047/ - . 7 . 3 T HE OBSERVATION OF THE ASSESSING OFFICER THAT PROFIT MAY HAVE BEEN DIVERTED TO SISTER CONCERNS IS ALSO FOUND TO BE UNSUBSTANTIATED. THE INSTANCES OF SALES OF COPPER SCRAP MENTIONED IN THE. ASSESSMENT ORDER ARE OF DIFFERENT TIMES OF THE YEAR. THE SALE OF COPPE R SCRAP AT RS. 320 - 330 PER KG. TOOK PLACE BETWEEN APRIL AND JULY 2008 WHEN THE SALE PRICE OF COPPER WIRE WAS BETWEEN RS. 410 AND 430 PER KG. THE SALE OF SCRAP AT RS. 160 - 200 PER KG. WAS IN DECEMBER 2008 WHEN THE SALE PRICE OF COPPER WIRE WAS RS. 225 PER KG . THE ASSESSING OFFICER HAS NOT COMPARED THESE SALE INSTANCES WITH ANY SALES TO OUTSIDE PARTIES, AND THE ASSESSING OFFICER HAS NOT SHOWN THAT THE SALE PRICE OF COPPER SCRAP PREVAILING AT THE TIME WAS LOWER THAN THE RATE CHARGED FROM THE SISTER CONCERNS. 7 . 4 T HE COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE GROSS LOSS IS ALSO ON ACCOUNT OF THE OPENING STOCK OF 88,692 KGS. OF COPPER VALUED AT RS. 445 PER KG. THE PURCHASE QUANTITY OF 1552.210 MT IS LESS THAN THE SALE QUANTITY OF 1640.90 MT WHICH COULD ONLY HAVE COME OUT OF THE OPENING STOCK. HENCE THE FINDING OF THE ASSESSING OFFICER THAT THE MONTHLY RATES OF SALE AND PURCHASE SHOWS A SURPLUS OF RS. 5,25,35,185/ - AT THE END OF THE YEAR INSPITE OF THE FALL IN THE RATE OF ITA NO. 2792/ DEL/ 2013 9 COPPER, IGNORES THE VALUE OF OPENING S TOCK OF RS. 3,94,67,940/ - (88,692 X 445). WE FIND THAT T HIS CONTENTION IS CORRECT, AS A WORKING OF GROSS PROFIT MUST NECESSARILY TAKE INTO ACCOUNT THE OPENING AND CLOSING STOCK, AND DIRECT EXPENSES, AND NOT ONLY BE BASED ON COMPARISON OF PURCHASE PRICES OF RAW MATERIAL AND SALE PRICES OF FINISHED PRODUCTS. THAT THE ASSESSING OFFICER HAS BASED THE ADDITION OF RS. 4,31.41,035/ - ENTIRELY ON TH E FALL IN GROSS PROFIT RATE, WITHOUT BRINGING ANY OTHER MATERIAL ON RECORD, AND WITHOUT DISPUTING THE RESULTS. IT IS E STABLISHED LAW THAT FALL IN G ROSS PROFIT ALONE, WITHOUT POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNT, IS NOT AN ADEQUATE BASIS FOR MAKING ADDITIONS. ADDITIONS TO THE PROFITS OF THE ASSESSEE MADE SOLELY ON THE GROUND THAT IT WAS LOW WITHOUT GIVING A SPECIF IC FINDING THAT THE ACCOUNTS OF THE ASSESSEE WERE NOT CORRECT AND COMPLETE, OR THAT THE INCOME COULD NOT BE PROPERLY DETERMINED AND DEDUCED FROM THE ACCOUNTING METHOD EMPLOYED BY THE ASSESSEE, IS NOT JUSTIFIED. WE FIND CONSIDERABLE COGENCY IN THE FINDING O F THE LD. CIT(A) IN THE IMPUGNED ORDER THAT T HE MERE FACT THAT THERE WAS A LESS RATE OF GROSS PROFIT DECLARED BY AN ASSESSEE AS COMPARED TO THE PREVIOUS YEAR WOULD NOT BY ITSELF BE SUFFICIENT TO JUSTIFY THE ADDITION.' IN THIS REGARD, LD. CIT(A) HAS REFER RED THE DECISION IN THE CASE OF ALUMINIUM INDUSTRIES (P) LTD. VS. CIT (1995) 80 TAXMANN 184 (GAUHATI). A FTER CONSIDERING THE EVIDENCES FILED BEFORE LD. CIT(A) REGARDING THE CONTINUOUS FALL IN THE PRICES OF COPPER, AND AFTER VERIFYING THE QUANTITATIVE TAL LY OF CONSUMPTION OF RAW MATERIAL AND MANUFACTURE OF FINISHED GOODS, THE ADDITION MADE ON ACCOUNT OF ESTIMATION OF GROSS PROFIT, HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A). IN THE BACKGROUND OF THE AFORESAID DETAILED DISCUSSIONS , WE FIND THAT LD. CIT(A) HA S RIGHTLY DELETED THE ADDITION OF RS. 4 , 31 , 41,035/ - ENTIRELY ON THE FALL IN GROSS PROFIT RATE. THEREFORE, W E DO NOT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE LD. CIT(A), ITA NO. 2792/ DEL/ 2013 10 ACCORDINGLY, WE UPHOLD THE SAME B Y DISMISSING THE APPEAL FILED BY THE REVENUE. 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 11 / 0 6 /20 1 5 . SD/ - SD/ - [ J.S. REDDY ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 11 / 6 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES