ACIT 14(3), MUMBAI V. PREMIER DRUG HOUSE, MUMBAI

ITA 5781/MUM/2012

• Counselvise Citation: 578119914 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN V P
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Rejection of books of accounts; Business income; Rule of consistency

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ITA NO. 5781 / MUM/20 1 2 ( ASSESSMENT YEAR : 2008 - 2009 ) ACIT, 14(3) , MUMBAI - 21 VS. M/S PREMIER DRUG HOUSE, A - 102, SHREE VALLABH APT. CHS, POISAR GYMKHANA ROAD, NEAR KAMALA VIHAR SPORTS CLUB, KANDIVLI (WEST),MUMBAI - 400 067 PAN/GIR NO. : A A A FP 2486 M ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI ASGHAR ZAIN VP /ASSESSEE BY : SHRI REEPAL G. TRALSHAWALA DATE OF HEARING : 1 5 TH DECEM BER , 201 4 DATE OF PRONOUNCEMENT 20 TH FEBRUARY , 2015 O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) , DATED 23 - 7 - 2012 FOR THE ASSESSMENT YEAR 2008 - 09 , IN THE MATTER OF ORD ER PASSED U/S. 143 ( 3 ) OF THE I.T. ACT , WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY REVENUE : - 1. THE LD.C I T(A) ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION IGNORING THE FACT THAT THE ASSESSEE HAS DECLARED LOWER OVERALL GP FOR WHOLE YEAR @ 5.5% ON ITEMS TRADED, WHEREAS GP WAS WORKED OUT @ 17.5% FOR THE MONTH OF MARCH 2008 ALONE ON THE SAME ITEMS TRADED AND ALSO GP GENERALLY FOUND @ 15% TO 22% IN THE SIMILAR LINE OF BUSINESS I.E. DRUG AND PHARMACEUTICAL. 2) THE LD.CIT(A) ERRED IN LAW AS WELL AS ON FACT BY APPLYING DECISIONS IN THE CASE OF CIT VS. DARIUS PANDONE 330 ITR 485 ( BO M) AND GOPA L PUROHIT 336 ITR 287 ( BO M) WHEREIN THE FACTS ARE ENTIRELY DIFFERENT THAN THE CASE UNDER CONSIDERATION. ITA NO. 5781 / 1 2 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEALING IN PHARMACEUTICALS, RAW MATERIAL & CHEMICALS AND IS SHOWING BUSINESS INCOME THEREFROM. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO WORKED OUT ITEM WISE GP BY TAKING 101 PURCHASE BILLS FOR THE MONTH OF MARCH, 2008 AT 17.52%. T HE AO OBSERVED THAT ASSESSEE HAS SHOWN GP AT 7.8% THEREBY SUPPRESSED GP CONSIDERABLY INSOFAR AS IN COMPARABLE BUSINESS OTHERS WERE SHOWING GP BETWEEN 15 TO 22%. THE AO ALSO OBSERVED THA T AS PER AUDIT REPORT G.P. RATE OF ASSESSEE IS 7.8%, HE FURTHER FOUND THAT THIS G.P% OF 7.80% HAS BEEN ARRIVED AT AFTER TAKING INTO CONSIDERATION THE SALES TAX CREDIT RECEIVED FOR THE EARLIER YEARS AS THE SAME HAS BEEN DEBITED IN THE TRADING ACCOUNT. HENCE , THE ACTUAL G.P.% ON GOODS TRADED IS ONLY 5.50%. THE AO ALSO OBSERVED THAT T HE ASSESSEE HAD NOT ACCOUNTED FOR SALES TAX CREDIT ON ACCRUAL BASIS OF ACCOUNTING FOLLOWING BY ASSESSEE . THE AO FURTHER OBSERVED THAT THE ELEMENT OF DIRECT EXPENSES ON PURCHASE IS HIGHER THAN THE SAME ON SALES MAINLY ON ACCOUNT OF THE DIFFERENCE OF 2% CST. DIRECT EXPENSES ON PURCHASES IS RS.19,19,898/ - AND ON SALE IS 13,91,168/ - . AS A RESULT G.P.% BASED ON THE GROSS TOTAL APPEARING AT THE END OF THE INVOICES WAS LOWER THAN THE GP% CALCULATED ON THE BASIS OF THE SALE AND PURCHASE RATE. AT PAGE 10, FURTHER OBSERVATION OF AO WAS AS UNDER : - DURING THE COURSE OF HEARING ON 10. 12.2010, THE ASSESSEE HAS STATED THAT GRAND TOTAL APPEARING IN THE BILL IS TAKEN INTO CONSIDERATION FOR RESPE CTIVE SALE AND PURCHASE AND THE SAME IS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR THAT PARTICULAR TRANSACTION. SINCE THE ASSESSEE HAD SUBMITTED THE SALE AND PURCHASE BILL FOR - THE MONTH OF MARCH, 2008, A LOGICAL COROLLARY CAN HENCE BE DRAWN THAT THE TOTAL OF THE PURCHASES APPEARING IN THE PURCHASE BILL OF MARCH, 2008 SHOULD BE SAME AS MONTH WISE DETAILS OF PURCHASE AS DISCLOSED BY THE ASSESSEE. SIMILARLY THE TOTAL GROSS SALE AMOUNT APPEARING IN THE SALES ITA NO. 5781 / 1 2 3 BILL FOR THE MONTH OF MARCH, 2 008 SHOULD B E SAME AS TOTAL SALES FOR THE MONTH OF MARCH DISCLOSED BY THE ASSESSEE IN THE MONTH WISE SALE DETAILS PROVIDED. HOWEVER, THERE APPEARS TO BE A DISCREPANCY IN RESPECT OF THE SAME. FOR THE MONTH OF MARCH, 2008, THE ASSESSEE CLAIMS THAT PURCHASES WERE MADE OF RS. 2,01,86,243/ - . HOWEVER, THE TOTAL OF THE PURCHASE BILL SUBMITTED BY THE ASSESSEE FOR THE MONTH OF MARCH, 2008 COMES AT RS. 1,96,35,278.53/ - (WHICH INCLUDES THE PURCHASES MADE IN MARCH THAT IS SHOWN AS CLOSING STOCK). SIMILARLY, ASSESSEE HAD SHOWN SALE S OF RS. 2,28,15,535/ - FOR THE MONTH OF MARCH, 2008. HOWEVER, AS PER THE SALES BILL, THE TOTAL COMES AT RS. 1,79,84,469/ - . IT SHOWS THE APPARENT DISCREPANCY IN THE DETAILS FURNISHED BY THE ASSESSEE. EITHER THE MONTH WISE DETAIL IN RESPECT OF SALE AND PURCH ASE IS INCORRECT OR THE BILLS SUBMITTED BY THE ASSESSEE FOR THE MONTH OF MARCH IS ERRONEOUS. 4. CONSIDERING THE FACTS STATED ABOVE, IT APPEARS THAT THE ASSESSEE HAS SUPPRESSED ITS GP CONSIDERABLY. THE ASSESSEE HAS DECLARED GP OF 5.5% ON ITEMS TRADED IN H OWEVER THE SAME FOR THE MONTH OF MARCH 08 COMES AT 17.5%. MOREOVER IN COMPARABLE BUSINESS THE OTHERS ARE SHOWING A GP BETWEEN 15% TO 22%. AS A RESULT 10% OF THE TOTAL SALES TURNOVER AMOUNTING TO RS.2,15,31,766/ - IS ADDED BACK TO THE TOTAL INCOME OF THE ASS ESSEE TO MAKE GOOD THE SHORTFALL IN G.P. % AS SHOWN BY THE ASSESSEE. 3. AGAINST THE ABOVE ORDER OF AO, THE ASSESSEE APPROACHED TO THE CIT(A). BY THE IMPUGNED ORDER, THE CIT(A) DELETED ENTIRE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS : - 4. I HAVE EXAMINED THE ASSESSMENT ORDERS PASSED BY PREDECESSOR OF THE ASSESSING OFFICER FOR EARLIER YEARS. IN NONE OF THE EARLIER CASES THE BOOKS OF ACCOUNTS HAVE BEEN DOUBTED UPON. THE GP SHOWN BY THE ASSESSEE WAS ACCEPTED BY THE PREDECESSORS OF THE ASSESSING OFFIC ER IN PAST IN THE ASSESSMENT FRAMED U/S.143(3). 4.1. SIMILARLY, NO OBJECTION HAS BEEN RAISED IN THE PAST WITH REGARD TO SALES TAX REFUND CREDITED IN THE YEAR OF THE RECEIPT. THE CREDITING OF REFUND OF THE SALES TAX ON RECEIPT BASIS FOR ALL THESE YEARS HAV E ALSO BEEN ACCEPTED BY THE DEPARTMENT. I DO ACCEPT THE STAND OF THE ASSESSEE THAT IT WAS NOT PRACTICABLE TO SHOW THE SALES TAX REFUND ON ACCRUAL BASIS IN THE TRADING ACCOUNT. IT WAS OBSERVED THAT THERE WAS SOME VARIATION IN THE FIGURE OF THE CLAIM OF SALE S TAX REFUND AND ACTUAL RECEIPT OF THE REFUND AMOUNT. FURTHER, THERE WAS A TIME GAP BETWEEN THE YEAR OF CLAIM AND THE YEAR OF RECEIPT. IT IS APPARENT FROM THE FOLLOWING TABLE: DETAILS OF SALES TAX (VAT REFUND) F.Y. A.Y. CLAIM AMT. REFUND AMT YEA R IN WHICH REFUND RECEIVED WHETHER SALES TAX ORDER RECEIVED OR NOT 2004 - 05 2005 - 06 NIL NIL YES 2005 - 06 2006 - 07 998009 831904 F.Y.2007 - 08 YES 2006 - 07 2007 - 08 1064231 903658 F.Y.2010 - 11 YES 2007 - 08 2008 - 09 2168978 2116487 F.Y.2010 - 11 YES 2008 - 09 2009 - 10 1747169 1583923 F.Y.2011 - 12 YES 2009 - 10 2010 - 11 1587656 NOT RECEIVED NOT RECEIVED NOT RECEIVED 2010 - 11 2011 - 12 2633408 NOT RECEIVED NOT RECEIVED NOT RECEIVED ITA NO. 5781 / 1 2 4 4.1. AS STATED IN THE SUBMISSIONS OF THE ASSESSEE DELHI TRIBUNAL AND PUNE TRIBUNAL IN THE C ASE OF LURGI INDIA & MAHARASHTRA DEVELOPMENT CORP. RESPECTIVELY THAT AT TIMES IT IS POSSIBLE AND MAY BE EVEN NECESSARY, DEPENDING UPON PROBABILITY OR IMPROBABILITY OF BEING ABLE TO RECOVER THE AMOUNT, REVENUE WHICH LEGALLY ACCRUE TO THE ASSESSEE MAY NOT BE TAKEN INTO ACCOUNT FOR THE PURPOSES OF INCOME RECOGNITION, TO THAT EXTENT IT IS POSSIBLE FOR AN ASSESSEE TO RECOGNIZE SUCH REVENUES, DUE TO THEIR PECULIAR NATURE, ONLY ON RECEIPT BASIS. FURTHER, HAVING ACCEPTED A PARTICULAR METHOD OF ACCOUNTING IN EARLIER YEARS, THOUGH IT MAY NOT BE A PERFECT METHOD, IT WOULD NOT BE OPEN TO THE REVENUE TO DISTURB THE SAME IN SUBSEQUENT YEARS. IN VIEW OF THESE, THE ASSESSEE SUBMITTED THAT THE ACCOUNTING PRACTICE FOLLOWED BY IT IN THE PAST BY THE DEPARTMENT WITH REGARD TO SA LES TAX REFUND BEING OFFERED FOR TAX ON RECEIPT BASIS DID NOT DISTORT - THE PROFIT SHOWN AND THEREFORE, A.O. SHOULD HAVE ACCEPTED THE RETURNED INCOME. 4.2. IN THIS BACK GROUND, I AM OF THE VIEW SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTIN G, BUT THE SALES TAX REFUND WAS BEING SHOWN BY THE ASSESSEE ON RECEIPT BASIS AND THIS SYSTEM OF ACCOUNTING WAS ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEARS. THEREFORE, THE SYSTEM OF ACCOUNTING ADOPTED BY THE ASSESSEE NEED NOT BE DISTURBED FOR THIS ASSES SMENT YEAR. THIS IS IN THE LINE WITH THE PRINCIPLE OF CONSISTENCY ADVOCATED BY THE COURTS. IT IS TRUE THAT THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE IN INCOME - TAX ASSESSMENT, AS EACH ASSESSMENT YEAR IS A SEPARATE UNIT; HOWEVER, THE COURTS HAVE CLEARL Y HELD TIME AND AGAIN THAT IF THE ASSESSEE WAS FOLLOWING PRINCIPLE OF ACCOUNTING ON REGULAR BASIS AND IT WAS ACCEPTED BY THE DEPARTMENT IN THE PAST, THEN THERE WAS NO NEED TO DISTURB THE ACCOUNTING FOR A PARTICULAR YEAR. I, THEREFORE, DO NOT FIND ANY JUSTI FICATION FOR REJECTING THE BOOKS OF ACCOUNTS AS DONE BY THE AO. 4.3. AS STATED ABOVE, THERE WAS A VARIATION BETWEEN THE CLAIM OF THE REFUND FOR SALES TAX IN THE RETURN OF SALES TAX AND ACTUAL RECEIPT. SO IT IS NOT POSSIBLE TO ESTIMATE THE AMOUNT OF REFUN D WHICH THE ASSESSEE WOULD GET. IT IS NOT THE CASE OF THE DEPARTMENT THAT SOMETHING RECEIVED BY ASSESSEE IS GOING OUT OF THE TAX NET. IT IS ONLY THE DIFFERENCE IN' THE YEAR IN WHICH SALES TAX REFUND IS GETTING ACCOUNTED FOR. IT WOULD BE UNJUST TO REJECT TH E BOOKS OF ACCOUNTS AND ESTIMATE THE GP ON THE BASIS OF SALES TAX REFUND BEING ACCOUNTED ON RECEIPT BASIS. CONSIDERING THE FACTS THAT THE TAX RATES ARE ALMOST CONSTANT FOR THE LAST 6 TO 8 YEARS, THE VARIATION WOULD NOT HAVE SUBSTANTIALLY IMPACTED THE PROFI T OFFERED FOR TAX DURING THE YEAR. THE CHART GIVEN ABOVE WITH REGARD TO SALES TAX REFUND FOR SEVEN YEARS ALSO EXPLAIN THE DISCREPANCY BETWEEN THE CLAIM OF TAX REFUND AND ACTUAL AMOUNT RECEIVED AS WELL AS THE TIME GAP BETWEEN THE CLAIM AND YEAR. SINCE THIS PRACTICE WAS ACCEPTED BY THE EARLIER AO IN THE COURSE OF THE PAST ASSESSMENT, I AM OF THE VIEW THAT IN LIGHT OF THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. DARIUS PANDOLE 330 ITR 485(BOM), GOPAL PUROHIT 336 ITR 287 (BOM) AND DELHI AND PUNE TRIBUNA L IN LURGI INDIA & MAHARASHTR A DEV ELOPMENT CORPORATION, THE ACCOUNTING SYSTEM FOLLOWED BY THE ASSESSEE CONSISTENTLY AND WHICH WAS ACCEPTED BY THE DEPARTMENT DURING THE COURSE OF THE PAST ASSESSMENTS NEED NOT BE DISTURBED FOR THE CURRENT YEAR. 5. TO SUM U P IN VIEW OF THE FACT THAT THE AO HAS WRONGLY WORKED OUT THE GP BY FOLLOWING HER OWN METHOD OF WORKING OUT THE GP WHICH IS ITA NO. 5781 / 1 2 5 NOT IN CONSONANCE WITH THE NORMAL ACCEPTED ACCOUNTING PRACTICE AND ALSO TAKING INTO ACCOUNT THE FACT THAT THE ASSESSEE WAS CONSISTENT LY FOLLOWING THE PRACTICE OF OFFERING FOR INCOME TAX, REFUND OF THE SALES TAX IN THE YEAR OF ACTUAL RECEIPT AND THIS ACCOUNTING OF THE ASSESSEE BEING ACCEPTED BY THE DEPARTMENT IN THE PAST ASSESSMENTS, THERE IS NO JUSTIFICATION FOR REJECTING THE BOOKS OF A CCOUNT FOR THE CURRENT YEAR. THE ADDITION MADE BY AO TO THE TUNE OF RS.2,15,31,766/ - IS NOT WARRANTED AND IS THEREFORE DELETED. THE ESTIMATION OF THE AO @ 10 % OVER AND ABOVE THE GP SHOWN BY ASSESSEE THEREFORE, IS UNWARRANTED IN THE FACTS AND CIRCUMSTANCES O F THE CASE. 4. AGAINST THE ABOVE ORDER OF CIT(A) , THE REVENUE IS IN APPEAL BEFORE US. 5. IT WAS CONTENDED BY THE LD.DR SHRI ASGHAR ZAIN VP THAT WITHOUT CONTROVERTING THE FINDINGS RECORDED BY THE AO WITH REGARD TO HIGHER G P RATE WORKED OUT IN RESPECT OF S ALES EFFECTED IN MARCH,2008 , WHICH WORKS OUT AT 17.52%, THE CIT(A) HAS ACCEPTED THE GP RATE OF 5.5% SHOWN BY THE ASSESSEE. LD. DR INVITED OUR ATTENTION TO THE DETAILED OBSERVATION MADE BY THE AO WITH REGARD TO THE HIGHER GP RATE SHOWN BY THE TRADER INVOLV ED IN THE SIMILAR TRADE AND ALSO THE FACT THAT THE AO HIMSELF HAS WORKED OUT THE GP RATE BY TAKING PURCHASE AND SALES DETAILS IN THE MONTH OF MARCH, 2008. 6. ON THE OTHER HAND, LD. AR VEHEMENTLY ARGUED THAT NO DEFECTS WAS FOUND IN THE BOOKS OF ACCOUNT, THE REFORE, THE AO WAS NOT JUSTIFIED IN REJECTING BOOKS OF ACCOUNTS. HE FURTHER CONTENDED THAT SALES TAX REFUND HAVE BEEN CREDITED BY THE ASSESSEE ON RECEIPT BASIS AS DONE IN THE EARLIER YEAR WHEREIN BOOKS OF ACCOUNTS OF ASSESSEE WAS NOT REJECTED AND THE RESUL TS SHOWN BY THE ASSESSEE WAS ACCEPTED IN THE ASSESSMENT FRAMED U/S.143(3) OF THE ACT. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE AO HAD ITA NO. 5781 / 1 2 6 REJECTED BOOK RESULTS BY OBS ERVING THAT ASSESSEE HAS NOT CORRECTLY ACCOUNTED FOR REFUND OF SALES TAX, THERE WAS DISCREPANCY IN PURCHASES AND SALES AS RECORDED IN BOOKS OF ACCOUNT VIS - - VIS BILLS OF PURCHASES AND SALES PRODUCED BY THE ASSESSEE FOR THE MONTH OF MARCH AND THAT OTHER DEA LERS INVOLVED IN THE SAME TRADE WERE HAVING SUBSTANTIAL HIGH GROSS PROFIT RATE AS COMPARED TO THE GROSS PROFIT RATE DISCLOSED BY THE ASSESSEE. WE FOUND THAT THE ASSESSEE HAS GIVEN CREDIT FOR REFUND OF SALES TAX ON RECEIPT BASIS IN ALL THESE YEARS. SINCE TH E ASSESSEE WAS FOLLOWING CONSIST ENTLY CASH SYSTEM OF ACCOUNTING. W ITH REGARD TO THE REFUND OF SALES TAX, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR HOLDING THAT THIS IS ONE OF THE VALID REASON FOR REJECTION OF THE BOOKS OF ACCOUNTS. THE AO HAS AL SO OBSERVED THAT IN COMPARABLE BUSINESS OTHER ASSESSEE S WERE SHOWING HIGHER GROSS PROFIT RATE BETWEEN 15 TO 22% AS AGAINST PROFIT RATE SHOWN BY THE ASSESSEE AT 5.5%, HOWEVER, NO SUPPORTING MATERIAL WAS BROUGHT ON RECORD BY THE AO IN SUPPORT OF ITS CONTENTI ON THAT THAT OTHER BUSINESS HOUSES ENGAGED IN THE SAME ACTIVITY WERE SHOWING HIGHER PROFIT RATE SO AS TO MAKE IT A REASON FOR REJECTION OF BOOKS OF ACCOUNTS. ACCORDINGLY , THIS CONTENTION OF AO IS ALSO NOT ACCEPTABLE. IT IS ALSO TRUE THAT IN EARLIER YEARS, THE BOOKS OF ACCOUNT WERE ACCEPTED BY THE AO AND NO TRADING ADDITION WAS MADE. HOWEVER, EACH YEAR IS INDEPENDENT AND MERELY BECAUSE IN EARLIER YEAR S THE AO HAS NOT REJECTED BOOKS OF ACCOUNTS, WILL NOT PRECLUDE THE AO FROM SUCH ACTION IF HE FINDS ANYTHING W RONG IN THE BOOKS OF ACCOUNT. IN THE INSTANT CASE, THE AO AFTER TAKING DETAIL S OF PURCHASE BILLS IN THE MONTH OF MARCH, 2008, COMPARED THE SAME WITH THE PURCHASES AS DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ITA NO. 5781 / 1 2 7 ACCOUNTS, WHEREIN THE AO FOUND THAT AS PER THE P URCHASE BILL TOTAL PURCHASE IN THE MONTH OF MARCH, 2008 WORKS OUT TO BE RS.1,96,35,278.53 (WHICH INCLUDES THE PURCHASES MADE IN MARCH I.E. SHOWN AS CLOSING STOCK ) WHEREAS AS PER BOOKS OF ACCOUNTS THE ASSESSEE HAS CLAIMED PURCHASE OF RS. 2,01,86,243/ - . SIMIL ARLY, TOTAL OF SALES BILL IN THE MONTH OF MARCH, 2008 WORKS OUT AT RS. 1,79,84,469/ - AS AGAINST ACTUAL SALES SHOWN IN THE BOOKS AT RS .2,28,15,535/ - .THE AO OBSERVED THAT IT SHOWS THE APPARENT DISCREPANCY IN THE DETAILS FURNISHED BY THE ASSESSEE AND OBSERVED THAT EITHER THE MONTH WISE DETAIL IN RESPECT OF SALE AND PURCHASE IS INCORRECT OR THE BILLS SUBMITTED BY THE ASSESSEE FOR THE MONTH OF MARCH IS ERRONEOUS. HOWEVER, THE CIT(A) HAS NOT CONTRO VERTED THESE FINDINGS OF THE AO TO JUSTIFY CORRECTION OF GP SHOWN B Y THE ASSESSEE DURING T HE YEAR UNDER CONSIDERATION AND ACCEPTED BY CIT(A) AS CORRECT . 8. FROM THE RECORD, WE FOUND THAT ASSESSEE HAD SHOWN FOLLOWING GP RATE IN EARLIER YEARS WHICH ARE AS UNDER : - ASSESSMENT YEAR GP RATE(%) 2005 - 06 9.75% 2006 - 07 9.47% 2007 - 08 9.19% HOWEVER, AS AGAINST THESE , GP RATE WAS SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AT 7.8 % , THE AO HAS APPLIED GP RATE AT 17.80 % AND WORKED OUT TRADING ADDITION ACCORDINGLY . KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE MODIFY THE ORDER OF BOTH THE LOWER AUTHORITIES AND DIRECT THE AO TO APPLY GP RATE AT 9% DURING THE YEAR UNDER CONSIDERATION AS AGAINST GP RATE 7.8 % SHOWN BY THE ASSESSEE AND THE GP RATE OF 1 7. 8 % APPLIED BY THE AO . ITA NO. 5781 / 1 2 8 9 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20/02 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 20/02 /201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//