M/s. Deep Jyoti Dyeing & Printing Mills Pvt.Ltd., Dist.Surat V. The Income tax Officer,Ward-1(2), Surat

ITA 39/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6130 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI RAJ KUMAR
• Assessee Lawyers: J P SHAH
• Keywords: Gross profit estimation
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.39 / AHD/2009 (ASSESSMENT YEAR 2005-06) M/S. DEEP JYOTI DYEING & PRINTING MILL PVT. LTD., BLOCK NO.63/C, POST VARELI, TAL. PALSANA, DISTT. SURAT VS. ITO, WARD 1(2), SURAT PAN/GIR NO. : AAACD8501Q (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI J P SHAH, AR RESPONDENT BY: SHRI JAI RAJ KUMAR, DR O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE HAS BEEN PREFERRED AGA INST THE ORDER OF LD. CIT(A) I, SURAT DATED 17.10.2008 FOR THE ASSESSMENT YEAR 2005-06. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: L.(I) THE C.I.T.(APPEALS) ERRED IN UPHOLDING THE REJECTION OF THE BOOKS OF ACCOUNTS OF THE ASSESSES UNDER SECTION 145 , AND IN UPHOLDING THE ESTIMATED GROSS PROFIT OF 16% ON THE TURNOVER OF RS.8,02,55,568/-AGAINST THE GROSS PROFIT OF 11.86% SHOWN BY THE ASSESSEE ON THE SAME TURNOVER BACKED BY STATUTORY A UDIT REPORT AND SECTION 44AB REPORT. I.T.A.NO.39 /AHD/2009 2 1.(II) THE C.I.T.(APPEALS) FAILED TO APPRECIATE THA T THE ASSESSEE HAD GIVEN NUMBER OF REASONS FOR FALL IN GROSS PROFIT BU T THE ASSESSING OFFICER ONLY ACCEPTED THE REASON OF THEFT OF FINISH ED GOODS FROM THESE REASONS AND FALL IN GROSS PROFIT RATE SHOWN IN OTHE R COMPARATIVE CASES (WITHOUT DISCLOSING THEM TO THE ASSESSEE) AND THAT, ON THE BASIS OF THESE OTHER REASONS AND FALL IN GROSS PROFIT IN TEX TILE INDUSTRY EITHER GROSS PROFIT OF 11.86% WAS REASONABLE OR A NOMINAL ADDITION WOULD HAVE MET THE ENDS OF JUSTICE. 2. THE C.I.T.(APPEALS) ERRED IN NOT ALLOWING RS.1,25,000/- ON INSTALLING WINDOW BASE PACKAGE FOR PROCESSOR AND RS .31,0007- PROCESS INVENTORY SYSTEM AS CURRENT REPAIRS. 2. THE BRIEF FACTS OF THE ISSUE INVOLVED IN GROUND NO.1 ARE NOTED BY THE LD. CIT(A) IN PARA 2.1.1 TO 2.1.4 OF HIS ORDER WHIC H ARE REPRODUCED BELOW: 2.1.1 THESE ARE REGARDING REJECTION OF BOOKS OF A CCOUNT AND ADDITION OF RS.32,98,800/-. IN THE ASSESSMENT ORDER , THE A.O. HAS STATED THAT THE ASSESSEE HAD FILED ITS RETURN OF IN COME ON 18.10.2005 DECLARING NIL INCOME. THE ASSESSEE IS EN GAGED IN THE BUSINESS OF PROCESSING WORK OF DYEING AND PRINTING OF CLOTH ON JOB WORK BASIS. DURING THE YEAR, THE ASSESSEE HAS SHOWN PROCESSING CHARGES OF RS.8,02,55,5687- AND G.P. @11.86% AS COM PARED TO LAST YEAR TURNOVER OF RS.6,76,66,576/- AND G.P. @19.42%, THE A.O. ISSUED A SHOW-CAUSE NOTICE AS TO WHY THE BOOKS OF A CCOUNT MAY NOT BE REJECTED AND ALSO ASKED THE ASSESSEE TO SUBMIT T HE FOLLOWING EXPLANATION/DETAILS/INFORMATION:- (I) G.P. RATE HAS BEEN FALLEN IN THE CURRENT Y EAR AND, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THE SAME. (II) THE 'A.O. ASKED THE ASSESSEE TO FURNISH DE TAILS OF MONTH-WISE OPENING STOCK, PURCHASE, CONSUMPTION AND CLOSING ST OCK BOTH IN TERMS OF QUANTITY AND VALUE IN RESPECT OF VARIOUS RAW-MAT ERIAL LIKE COLOUR & CHEMICALS, TRACING, COAL & LIGNITE, BOLTING CLOTH & BACK GREY, STORES & SPARES. THE A.O. ASKED THE ASSESSEE TO SUBMIT THE DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM. (III) THE A.O. ALSO ASKED THE ASSESSEE TO PRODUC E A CHART OF PURCHASE SHOWN BY THE ASSESSEE AND THE PURCHASE AS PER THE PARTIES FROM WHOM THE ASSESSEE HAD SHOWN TO HAVE MADE THE PURCHASE. T HE A.O. HAD I.T.A.NO.39 /AHD/2009 3 MADE INQUIRY BY ISSUING NOTICES U/S.133(6). THE A.O . ASKED THE ASSESSEE TO RECONCILE THE DIFFERENCE OF PURCHASE SHOWN BY THE ASSESSEE AND THOSE SHOWN BY THE PARTIES. -I I (IV) THE A.O. ALSO PREPARED IN PARA-3 A CHART OF COST OF CONSUMPTION OF. VARIOUS RAW-MATERIALS FOR PRODUCTIO N OF ONE METER CLOTH, WHICH IS AS UNDER:- RAW MATERIALS COST PER METER OF PRODUCTION CURRENT YEAR LAST YEAR COAL & LIGNITE, BAGASSE 0.97 0.67 BOLTING CLOTH 0.65 0.06 TRACING 0.17 0.12 POWER CONSUMPTION 0.90 0.77 REPAIRS & MAINTENANCE 0.12 0.06 THE A.O. ASKED THE ASSESSEE TO EXPLAIN THE DIFFEREN CE OF THIS COST AS COMPARED TO LAST YEAR. THE A.O. ASKED THE ASSESSEE TO JUSTIFY THE SUBSTANTIAL INCREASE IN CONSUMPTION OF RAW MATERIAL AS SHOWN IN THE ABOVE CHART. (V) THE A.O. STATED THAT AS PER THE COLUMN NO.2 8(B) OF AUDIT REPORT, THE ASSESSEE HAS NOT MAINTAINED QUANTITATIV E RECORDS OF DAY- TO-DAY CONSUMPTION OF RAW MATERIALS, COLOUR & CHEMICALS. THE A.O. ASKED THE ASSESSEE TO FURNISH A CHART OF MONTH-WISE PRODUCTION DETAILS OF PROCESSING OF CLOTH BOTH IN TERMS OF QUANTITY AND VALUE AND COMPARE IT WITH POWER, FUEL AND LABOUR EXPENSES. ACCORDING TO THE A.O., AS PER THIS CHART THE EXPEND ITURE ON POWER PER METER OF CLOTH PROCESSED FLUCTUATES FROM A MAXIMUM OF RS.1.32 IN THE MONTH OF JUNE 2004 TO A MINIMUM OF RS.0.57 IN JULY 2004. IN THE INTERVENING MONTHS ALSO THE EXPENSES PER METER OF CLOTH PRODUCED FLUCTUATES HEA VILY WHICH CAN BE SEEN FROM THE CHART GIVEN. THE A.O., THEREFORE, ASK ED THE ASSESSEE TO EXPLAIN THE HUGE FLUCTUATION. THE A.O. STATED THAT AS PER THE I.T.A.NO.39 /AHD/2009 4 SUBMISSION GIVEN EARLIER IN RESPECT OF THE MAIN REA SON FOR FALL IN G.P. RATE, THE ASSESSEE REPLIED THAT THE FALL IN G.P. RATE BECAUSE OF THEFT, OF FINISHED GOODS. THE ASSESSEE FILED AN FIR WITH THE POLICE. ACCORDING TO THE ASSESSEE, THE REASONS FOR FALL IN G.P. @7.53% CAN BE CATEGORIZED AS UNDER:- SR.NO. PARTICULARS VALUE EFFECTED % L THEFT 297395.97 0.37 2 AVERAG E 450869.10 0.56 3 ELECTRIC 1204753.60 1.50 4 DIESEL 73963.00 0.09 5 COAL & 2394361.29 2.98 6 OCTROI 449234,67 0.56 7 DESIGN 563620.13 0.70 8 REPAIR 676344.15 0.84 TOTAL 7.60 2.1.2 THE ASSESSEE STATED THAT THERE WAS A FALL IN AVERAGE SELLING PRICE FROM RS.7.20 PER METER TO RS.7.16 PER METER IN CURRENT YEAR. SIMILARLY, THERE WAS INCREASE OF ELECTRICITY EXPENSES FROM RS.4.08 PER UNIT TO RS.4.61 IN THE CURRENT YEAR. TH E REASON FOR FALL IN G.P. RATE IS BECAUSE OF INCREASE IN DIESEL RATE FROM RS.77.22 PER METER IN THE LAST YEAR TO RS.8.70 PER METER IN THE CURRENT YEAR. SIMILARLY, COAL & LIGNITE ALSO BECOME EXCESSIVE AND THE AVERAGE PRICE PER TONE INCREASED FROM 1601.300 PER TONE IN THE LAST YEAR TO RS.2033.67 PER TON IN THE CURRENT YEAR. ACCORDING T O THE ASSESSEE, THE INCREASE IN THE OCTROI HAS ALSO AFFECTED THE G. P. RATE. IN THE LAST YEAR IT WAS RS.0.14 PER METER BUT INCREASED TO RS.0 .18 PER METER IN THE CURRENT YEAR. SIMILARLY, THERE WAS INCREASE IN THE DESIGN & SKETCH AND REPAIR & MAINTENANCE EXPENSES. WITH RESP ECT TO FLUCTUATION IN POWER AND LABOUR EXPENSES, THE ASSESSEE STATED T HAT THE METER READING TAKEN BY THE DEPARTMENT VARIES BECAUSE THE READING IS TAKEN ON DIFFERENT DATES AND EVERY MONTH. FURTHER, HIGHER UTILIZATION OF MACHINES GIVEN LESSER COST PER METER AND THIS VARIE S FROM SEASON TO SEASON. THE ASSESSEE ADMITTED THAT WITH RESPECT TO PURCHASE THERE WAS I.T.A.NO.39 /AHD/2009 5 DIFFERENCE IN THE TRANSACTIONS. THE ASSESSEE ADMITT ED THAT IT HAS FAILED TO MAKE APPROPRIATE ENTRIES IN ITS BOOKS WITHIN THE PREVIOUS YEAR ITSELF WHICH LEAD TO THE DISCREPANCY. 2.1.4 THE A.O. CONSIDERED THE SUBMISSION MADE BY TH E ASSESSEE AND STATED THAT IN THE ABSENCE OF MAINTENA NCE OF DAY-TO DAY QUANTITY DETAILS OF VARIOUS RAW-MATERIALS AND C ONSUMPTION RECORDS, CONSUMPTION CANNOT BE VERIFIED PROPERLY. T HE ASSESSEE HAS ADMITTED THE DIFFERENCE IN TRANSACTION RELATING TO PURCHASE OF VARIOUS RAW MATERIALS AS WELL AS ATTRIBUTABLE TO DI SCOUNT, CREDIT NOTE AND RATE DIFFERENCE. THE ASSESSEE HAS ADMITTED THAT IT HAS FAILED TO MAKE PROPER ENTRIES IN ITS BOOKS OF ACCOUNT DURING THE PREVIOUS YEAR ITSELF. THE A.O. STATED THAT THERE WAS A HUGE FALL IN G.P. RATE AND THE ASSESSEE HAS ADMITTED THAT NO QUANTITATIVE DETA ILS WERE MAINTAINED IN RESPECT OF COLOUR AND CHEMICALS. THE A.O. HAS RELIED ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SURINDER KUMAR CHARANJEET KUMAR (282-ITR-78) AND AL SO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF BRITISH PAINTS (186-ITR-44), WHEREIN THE HON'BLE SUPREME CO URT STATED THAT IN THE ABSENCE OF STOCK REGISTER COUPLED WITH OTHER MATERIALS, IF THE A.O. IS OF THE OPINION THAT CORRECT PROFIT AND GAINS CANNOT BE CALCULATED THEN HE CAN INVOKE THE PROVISIONS OF SEC TION 145. IN VIEW OF ABOVE, THE A.O. REJECTED THE BOOKS OF ACCOU NT AND ESTIMATED THE G.P. RATE AT 16% AS COMPARED TO 19.42 % SHOWN IN THE LAST YEAR AND 11.86% SHOWN IN THE CURRENT YEAR. TH E A.O. THEREFORE, ALLOWED FOR SOME ALLOWANCES FOR VARIOUS HEADS AND E STIMATED THE G.P. RATE AVERAGE BETWEEN THE LAST YEAR AND CURRENT YEAR . THE A.O. WAS, THEREFORE, MADE AN ADDITION OF RS.32,98,880/-. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FUR THER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. COUNSEL FOR THE ASSES SEE THAT THE FALL IN G.P. RATE IS OF 7.53% AND ASSESSEE HAS NOTED OUT 8 REASO NS FOR SUCH FALL IN THE G.P. RATES AS HAS BEEN NOTED BY THE A.O. ON PAGE 9 OF TH E ASSESSMENT ORDER. IT IS ALSO SUBMITTED THAT ALL THESE REASONS ARE EXPLAINED IN DETAIL BY THE ASSESSEE BEFORE THE A.O. AS IS NOTED BY THE A.O. ON PAGE 9 T O 16 OF THE ASSESSMENT I.T.A.NO.39 /AHD/2009 6 ORDER BUT ON PAGES 17-18 OF THE ASSESSMENT ORDER, T HE A.O. HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY MAKING OBSERVATIONS T HAT THERE IS SOME FORCE IN THE CONTENTION OF THE ASSESSEE WITH RESPECT TO THE INCIDENT OF THEFT WHICH EFFECTED G.P. RATE MARGIN AVERSELY BUT OTHER REASON S ARE GENERAL IN NATURE AND HAS NOT BEEN SUPPORTED BY DOCUMENTARY PROOF EXC EPT SOME ELECTRICITY BILLS. IT IS SUBMITTED THAT THE ACCOUNTS OF THE AS SESSEE ARE AUDITED AND DOCUMENTARY EVIDENCES ARE AVAILABLE FOR ALL THE EXP ENSES AND HENCE THE ADDITION IN G.P. MADE BY THE A.O. IS NOT JUSTIFIED. IT IS ALSO SUBMITTED THAT IN THE PRECEDING YEAR I.E. IN ASSESSMENT YEAR 2004-05 ALSO, G.P. ADDITION WAS MADE BY THE A.O. AND UPHELD BY THE LD. CIT(A) BUT T HE TRIBUNAL HAS ALLOWED PART RELIEF TO THE ASSESSEE IN I.T.A. NO. 3 435/AHD/2007 DATED 31.12.2007. HE SUBMITTED A COPY OF THIS TRIBUNAL O RDER AND POINTED OUT THAT IN THAT YEAR, ASSESSEE HAD DECLARED G.P. RATE OF 19 .42% AND THE A.O. ADOPTED G P RATE OF 22.7% IN THAT YEAR BUT THE TRIBUNAL HAS CONFIRMED THE PART ADDITION BY HOLDING THAT G P RATE OF 20.5 % IS REAS ONABLE. IT IS ALSO POINTED OUT THAT IN THE PRESENT YEAR, G P RATE DECLARED BY THE ASSESSEE AND ADOPTED BY THE A.O. BOTH ARE LOWER THEN THE G P RATE ADOPTED B Y THE TRIBUNAL IN THE PRECEDING YEAR AND HENCE, IN THE PRESENT YEAR, THIS ISSUE HAS TO BE DECIDED ON THE BASIS OF THE FACTS OF THE PRESENT CASE. IT IS ALSO POINTED OUT BY THE BENCH THAT ON PAGE 6 OF THE ASSESSMENT ORDER, THE A.O. HA S NOTED VARIOUS INCONSISTENCIES IN MONTH-WISE PRODUCTION VIS--VIS EXPENSES OF POWER AND LABOUR CHARGES. IN REPLY, IT WAS SUBMITTED THAT SO ME ADDITIONS MAY BE CONFIRMED IN THE PRESENT YEAR ALSO. 5. AS AGAINST THIS, THE LD. D.R. SUPPORTED THE ORD ERS OF AUTHORITIES BELOW. I.T.A.NO.39 /AHD/2009 7 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE A.O. HAS INVOKED THE PROVISIONS OF SECTION 145( 3) OF THE INCOME TAX ACT, 1961 AND REJECTED THE BOOKS OF ACCOUNT AND EST IMATED THE RATE OF G.P. NO ARGUMENT WAS MADE BY LD. A.R. OF THE ASSESSEE AB OUT ACTION OF THE A.O. IN REJECTING THE BOOKS U/S 145(3). HENCE, THAT ASP ECT IS DECIDED AGAINST THE ASSESSEE. FOR MERIT OF THE ADDITION, WE FIND THAT AS PER THE QUANTITATIVE DETAILS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. A ND NOTED BY THE A.O. ALSO IN THE ASSESSMENT ORDER, THERE IS INCREASE IN THE Q UANTITY OF PRODUCTION FROM 93.27 LAC MTRS. IN THE PRECEDING YEAR TO 112.72 LAC MTRS. IN THE PRESENT YEAR. THIS INCREASE IN QUANTITY IS AROUND 21%. INCREASE IN CONSUMPTION OF ELECTRICITY IN TERMS OF NUMBER OF UNITS IS FROM 17. 55 LACS UNITS IN THE PRECEDING YEAR TO 22.75 LACS UNITS IN THE PRESENT Y EAR WHICH SHOWS AN INCREASE OF AROUND 30%. SIMILARLY, THE INCREASE IN CONSUMPTION OF COAL AND LIGNITE IN QUANTITATIVE TERMS IS ALSO DISPROPORTION ATE TO THE INCREASE IN QUANTITY OF PRODUCTION. THE CONSUMPTION OF COAL AN D LIGNITE IN THE PRESENT YEAR IS 5538 MT AS AGAINST 3886 MT IN THE PRECEDING YEAR HAVING AN INCREASE OF MORE THAN 42.5%. THERE IS NO EXPLANATI ON OFFERED BY THE ASSESSEE EITHER BEFORE THE AUTHORITIES BELOW OR BEF ORE US REGARDING THIS DISPROPORTIONATE INCREASE IN CONSUMPTION OF COAL, L IGNITE AND ELECTRICITY AS COMPARED TO INCREASE IN QUANTITY OF PRODUCTION. 7. THE INCREASE IN AMOUNT OF EXPENDITURE FOR REPAIR S IS ALSO DISPROPORTIONATE. IT IS NOTED BY THE A.O. ON PAGE 13 OF THE ASSESSMENT ORDER THAT IN THE PRECEDING YEAR, THE EXPENDITURE ON ACCO UNT OF REPAIRS WAS RS.20.73 LACS WHEREAS IN THE PRESENT YEAR, IT HAS G ONE UP TO RS.32.04 LACS SHOWING AN INCREASE OF ABOUT 55%. THERE IS NO EXPL ANATION REGARDING THIS I.T.A.NO.39 /AHD/2009 8 DISPROPORTIONATE INCREASE IN THE EXPENSE ON ACCOUNT OF REPAIR AND MAINTENANCE ALSO. UNDER THESE FACTS, SOME ADDITION HAS TO BE MADE ON ACCOUNT OF LOW GP DECLARED BY THE ASSESSEE IN THE P RESENT YEAR. NOW, THE QUESTION IS, WHAT PERCENTAGE OF G.P. IN THE PRESENT YEAR SHOULD BE CONSIDERED AS REASONABLE? IN THE IMMEDIATELY PRECEDING YEAR T HE TRIBUNAL HAS HELD THAT RATE OF G.P. @ 20.5% AS AGAINST 22.7% ADOPTED BY TH E A.O. SHOULD BE CONSIDERED AS REASONABLE. IN THAT YEAR, THE GP DEC LARED BY THE ASSESSEE WAS 19.42% WHEREAS IN THE PRESENT YEAR, GP DECLARED BY THE ASSESSEE IS ONLY 11.86%. ON EARLIER DATE OF HEARING, I.E. ON 03.05. 2011, THE LD. A.R. WANTED TIME TO PRODUCE GP DETAILS OF EARLIER THREE YEARS A ND SUBSEQUENT THREE YEARS, WHICH WAS ALLOWED. BUT ON THE PRESENT DATE OF HEAR ING I.E. 04.07.2011, NO SUCH DETAILS WERE FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE. AFTER HEARING THE MATTER ON 04.07.2011 ALSO, HE AGAIN REQ UESTED FOR TIME TO SUBMIT SUCH DETAILS AND THE SAME WAS ALLOWED BUT BEFORE RI SING OF THE BENCH ON THE SAME DAY, HE SUBMITTED THAT IT IS NOT POSSIBLE FOR HIM TO FURNISH THOSE DETAILS AND HENCE, THE MATTER MAY BE TAKEN AS HEARD. THE R EASON GIVEN BY HIM FOR HIS INABILITY TO FURNISH THOSE DETAILS IS THAT THE ASSESSEE HAS CHANGED THE BRIEFING C.A. AND FOR THIS REASON, HE IS NOT IN A P OSITION TO OBTAIN SUCH DETAILS. WE FAIL TO UNDERSTAND THIS REASON GIVEN B Y THE LD. COUNSEL FOR THE ASSESSEE BECAUSE IT IS ADMITTED POSITION THAT HE IS ARGUING THE APPEAL ON BEHALF OF THE ASSESSEE ON THIS DATE THEN IT CANNOT BE ACCEPTED THAT HE CANNOT OBTAIN THE DETAILS FROM THE ASSESSEE. BE THAT AS I T MAY. WE DECIDE THE APPEAL OF THE ASSESSEE ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. IN THE ABSENCE OF THE DATA FOR THE PRECEDING THREE YEARS A ND SUCCEEDING THREE YEARS, WE CONSIDER THE DATA OF THE PRESENT YEAR AND IMMEDI ATELY PRECEDING YEAR WHICH ARE AVAILABLE BEFORE US. IN THE IMMEDIATELY PRECEDING YEAR, THE G P RATE DECLARED BY THE ASSESSEE WAS 19.42% AS HAS BE EN NOTED BY THE TRIBUNAL I.T.A.NO.39 /AHD/2009 9 IN THAT YEAR. THE TRIBUNAL HELD IN THAT YEAR THAT G P RATE OF 20.5% IS REASONABLE IN THE FACTS AND CIRCUMSTANCE OF THE CAS E. IN THE PRESENT YEAR, THE ASSESSEE HAS DECLARED GP @ 11.86% WHICH HAS BEEN ES TIMATED BY THE A.O. AT 16%. IF WE WORK OUT THE AVERAGE RATE OF GP DECL ARED BY THE ASSESSEE IN THE PRECEDING YEAR AND IN THE PRESENT YEAR, THE POS ITION EMERGES AS UNDER: GP DECLARED BY THE ASSESSEE IN THE PRECEDING YEAR 19.42% GP DECLARED BY THE ASSESSEE IN THE PRESENT YEAR 1 1.86% AVERAGE GP FOR THESE TWO YEARS 15.64% 8. THE A.O. HAS ESTIMATED THE G P RATE @ 16%. CONSIDERING ALL THES E FACTS AND CIRCUMSTANCES OF THE CASE IN THE PRESENT YEAR, WE F EEL THAT IT WOULD BE REASONABLE TO ESTIMATE THE PROFITS OF THE ASSESSEE BY APPLYING G P RATE @ 15% AS AGAINST 16% ADOPTED BY THE A.O. WE DIRECT A CCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PAR TLY ALLOWED. 10. ORDER PRONOUNCED ON 08 TH JULY 2011 SD./- SD./- (D. K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 08 TH JULY, 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE I.T.A.NO.39 /AHD/2009 10 1. DATE OF DICTATION. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..