The ACIT, Central Circle-1, Surat V. Shahlon Industries Pvt.Ltd., Surat

ITSSA 61/AHD/2013

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9512 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-11-2013
• Assessment Year: 2010-2011
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Gross profit estimation; Rejection of books of accounts; Depreciation; Income from undisclosed sources; Cost of acquisition

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . . . . , , , , ! ! ! ! ' #$ ' #$ ' #$ ' #$ , , , , % % % % BEFORE S/SHRI N.S. SAINI, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER) IT(SS)A NO.61/AHD/2013 [ASSTT.YEAR : 2010-2011] ACIT, CENT.CIR.1 SURAT. /VS. SHAHLON INDUSTRIES P. LTD. 3 RD FLOOR, DAWER CHAMBERS RING ROAD, SURAT. PAN : AAFCS 0163 E ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - / REVENUE BY : SHRI T.P.KRISHNAKUMAR, CIT-DR /$ , - / ASSESSEE BY : SHRI MEHUL R. SHAH '0 , $1/ DATE OF HEARING : 13 TH NOVEMBER, 2013 234 , $1/ DATE OF PRONOUNCEMENT : 22-11-2013 5 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A )-II, AHMEDABAD DATED 15.11.2012. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF THE RE VENUE IS THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F ` ,1,05,22,980/- MADE ON ACCOUNT OF ESTIMATION OF GP BY REJECTING IT(SS)A NO.61/AHD/2013 -2- BOOKS OF ACCOUNTS OF THE ASSESSEE, ESPECIALLY WHEN THE LD.CIT(A) HIMSELF UPHELD THE ACTION OF THE AO IN REJECTING TH E BOOKS OF ACCOUNTS U/S.145 OF THE ACT, AND ALSO ERRED IN NOT FOLLOWING THE RATIO LAID DOWN BY THE JURISDICTIONAL ITAT IN THE C ASE OF M/S.WHITELINE CHEMICALS VS. ITO, SURAT IN ITA NO.3509/AHD/2004. 3. BRIEF FACTS OF THE CASE, AS STATED BY THE REVENU E IN THE STATEMENT OF FACT BEFORE ARE AS UNDER: THE ASSESSEE COMPANY DERIVE INCOME FROM MANUFACTUR ING OF GREY FABRICS AND PREPARATORY. COMPARATIVE G.P CH ART OF THREE YEARS ARE AS UNDER: A.Y. TURNOVER GROSS PROFIT GP RATE (IN %) 2008-09 576797890/- 77764468/- 13.48 2009-10 59,52,30,699/- 8,74,76,449 14.70 2010-11 (YEAR UNDER CONSIDERATION) 91,44,62,898/- (EXCLUDING DISCLOSURE) 8,81,11,926/- (EXCLUDING DISCLOSURE) 9.63A.Y. DECLARED G.P. RATE DURING THE YEAR UNDER QUESTION I S MUCH LOWER SIDE IN COMPARISON TO IMMEDIATELY PRECEDING Y EAR. REASON OF LOW G.P. WAS ASKED FROM THE ASSESSEE AND HE REPLIED THAT THE ASSESSEE HAS PREPARED SEPARATE TRA DING ACCOUNTS FOR EACH ACTIVITY AND DURING THE YEAR G.P. RATIO HAS COME DOWN IN EACH DIVISION. HE FURTHER ARGUED T HAT THE COST OF GOODS SOLD HAS INCREASED DISPROPORTIONATELY AS COMPARE TO THE AVERAGE SALE REALISATION AND HE ALSO FURNISH COMPARATIVE STATEMENT OF PURCHASE PRICE AND SALE PR ICE OF THE MAJOR ITEMS WHERE SALE REALISATION HAS BEEN DEC REASED AND PURCHASE PRICE HAS INCREASE IN COMPARISON TO LA ST YEAR. HE FURTHER STATED THAT IN THE PRE SEARCH PERIOD THE G.P. RATIO COMES TO 8.6% AND IN CASE OF POST SEARCH PERI OD THE G.P. RATIO COMES TO 13.9% AS COMPARE TO G.P. RATIO OF 14.7% FOR THE FULL YEAR PERTAINING TO LAST YEAR. HE NCE THERE IT(SS)A NO.61/AHD/2013 -3- IS DECREASE IN THE G.P. RATIO IN THE POST SEARCH PE RIOD. HE FURTHER STATED THAT BOOKS OF ACCOUNTS CANNOT BE REJ ECTED EVENT THE DECLARATION MADE OF RS.3.40 CRORE HAS BEE N TAKEN INTO QUANTITY ACCOUNT AND SAID DECLARATION HAS BEEN SHOWN IN THE RETURN OF INCOME. SO FALL IN G.P. RATIO BY 5 .00 % IN PRE-SEARCH PERIOD IS COVERED BY THE DECLARATION. HE NCE G.P. RATE DECLARED BY THE ASSESSEE IS GENUINE. AFTER DUE CONSIDERATION OF THE WRITTEN SUBMISSIONS, THE A.O. HAS OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE AN Y SUPPORTING DOCUMENT IN SUPPORT OF HIS CLAIM AND EXPLANATION OF THE ASSESSEE IS IN VERY GENERAL NATU RE. HENCE THE ASSESSEE HAS FAILED TO EXPLAIN THE REASON OF LO W G.P RATE. ACCORDINGLY THE A.O. HAS REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE AND APPLY PROVISIONS OF SEC TION 145(3). BEFORE ESTIMATING THE G.P. RATE, THE A.O ST ATED THAT IT IS VERY MUCH JUSTIFIED BY TAKING AVERAGE OF G.P. RATE OF LAST TWO YEARS AND THIS YEAR AND HE GIVEN COMPARATI VE FIGURES OF VARIOUS ACTIVITIES OF THE COMPANY IN THE BODY OF THE ASSESSMENT ORDER WHICH ARE REPRODUCE AS UNDER: A.Y. HEAD WEAVING & GARMENT TEXTURING & TWISTING SIZIN G MACHINERY IN CR. RS. YARN & FABRICS OTHER NON OPERATING INCOME TOTAL EXCLUDING OTHER INCOME. 2008- 09 SALES IN CRS RS. 30.79 5.61 0 1.47 16.69 0.10 57.57 2008- 09 GP% 18.84 23.98 - 5.96 2.36 - - 2009- 10 SALES IN CRS RS. 31.84 7.03 0 7.83 20.42 0.15 59.37 2009- 10 GP% 21.96 17 - 37.04 1.87 - - 2010- 11 SALES IN CRS RS. 32.48 10.19 10.8 7 0 37.89 0 91.44 2010- 11 GP 22.61 7.74 16 - 1.37 - - IN A.Y. 2010-11 THERE WAS SIZING ACTIVITY WHICH WAS NOT IN IT(SS)A NO.61/AHD/2013 -4- EARLIER YEARS. FURTHER, THERE IS AN INCREASE IN GP IN WEAVING AND GARMENT DIVISION. SO FOR BETTER COMPARI SON OF LAST YEAR DATA IT IS TO JUSTIFY TO REDUCE SUCH TURN OVER AND THEIR RESPECTIVE GROSS PROFIT AND THEN TO COMPARE T HIS DATA. AFTER CONSIDERING THIS FACTS COMPARATIVE FIGURES AR E AS UNDER: A.Y. TEXTURISING & TWISTING ACTIVITY YARN & FABRICS TRADING ACTIVITY 2008-09 GP% 23.98 2.36 2009-10 GP% 17 1.87 2010-11 7.74 1.37 AVERAGE GP FOR THESE THREE YEARS 16.24 1.86 DIFFERENCE FROM AVERAGE 16.24-7.74=8.5 1.86-1.37=0.49 TURNOVER 10,19,57,000/- 37,89,05,000/- 2008-09 GP% 23.98 2.36 FROM THE ABOVE TABLE IT CAN BE SEEN THAT THE GROSS PROFIT HAS REDUCED FROM 16.24 % TO 7.74% IN TEXTURISATION & TWISTING ACTIVITY AND 1.86% TO 1.37% IN YARN TRADIN G ACTIVITY. THE A.O. AFTER TAKING AVERAGE OF G.P. OF ABOVE SAID THREE ASSESSMENT YEARS APPLIED THE DIFFERENCE OF G.P. AT THE RATE OF 8.5% ON THE TOTAL TURNOVER OF TEXTUR ISATION & TWISTING ACTIVITY AND 0.49% ON YARN AND FABRIC TRAD ING ACTIVITY AND MADE AN ADDITION OF RS.1,05,22,980/- I N THE TOTAL INCOME OF THE ASSESSEE THE A.O HAS TAKEN SUPP ORT FROM THE DECISION OF HON'BLE ITAT IN THE CASE OF M/ S. WHITE LIME CHEMICAL VS. ITO (ITA NO.-3509/ AHD/2004) FOR THE A.Y. 20011-12 WERE IN IT HAS BEEN HELD BY THE ITAT THAT KEEPING IN VIEW THIS ADMITTED FACT (DISCLOSURE OF I NCOME) FAIR AND REASONABLE ESTIMATION OF TOTAL INCOME SHOU LD BE NORMAL CURRENT YEAR PROFIT PLUS DISCLOSURE. BEING AGGRIEVED FROM THE ORDER OF THE A.O., THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND ID. CIT(A ) HAS UPHELD THE ACTION OF THE A.O. REJECTING THE BOOKS O F ACCOUNTS U/S. 145(3) OF THE I.T. ACT,1961. THE CIT( A) IT(SS)A NO.61/AHD/2013 -5- DELETED THE ENTIRE ADDITION OF RS.1,05,22,980/- ON THE GROUND THAT IT IS UNDISPUTED FACT THAT THE A.O. HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT FOR THE POST SEARCH PERIOD NO EXCESS STOCK OR SHORTAGE OF STOCK, INCREMENTING MATERIAL WERE FOUND DURING THE SEARCH ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE. THE APPE LLANT HAS FILED WORKING OF G.P. BOTH FOR THE PRE SEARCH P ERIOD AND POST SEARCH PERIOD. THE UNIT WISE G.P. WORKING HAS BEEN FILED BY APPLYING G.P. RATE OF THE A.Y. 2009-1 0 WHICH IS MORE THAN G.P. RATE OF 16.24 % AND 1.86% APPLIED BY THE ASSESSING OFFICER. THE FALL IN G.P. BY APPLYING EARLIER YEARS G.P. RATE COMES TO RS.113.06 LACS AS AGAINST THE DISCLOSURE OF ADDITION INCOME OF RS.340 00 LACS THE FALL IN G.P. OF 113.06 LACS IS MUCH LESS THAN DISCLOSURE OF RS.340 LACS MADE DURING THE SEARCH AND MORE OVER OVERALL C OST OF GOODS SOLD TO SALES RATIO WAS 83.05% IN A.Y. 2010-1 1 COMPARE TO 77.87% IN THE A.Y. 2009-10. CONSIDERING THE DISCLOSURE OF ADDITIONAL INCOME OF RS.340 LACS AND WORKING IN INCREASE OF COST OF GOODS SOLD DUE TO INCREASE IN PURCHASE PRICE OF RAW MATERIAL IT IS HE LD THAT APPELLANT SUCCESSFULLY EXPLAINED THE REASONS FOR FA LL IN G.P. IN PRE SEARCH PERIOD. ADMITTEDLY IN POST SEARCH PER IOD THE G.P. WAS 13.79% AS COMPARE TO G.P. RATIO 14.70% FOR FULL YEAR PERTAINING TO A.Y.2009-10. THE FALL IN G.P. IS COVERED BY DISCLOSURE OF UNACCOUNTED INCOME OF RS.340 LACS. THE CIT(A) FURTHER HELD THAT CASE OF WHITE LIME CHEMICA L IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE COMPANY BECA USE FACTS OF THIS CASE ARE ENTIRELY DIFFERENT FROM THE CITED CASE. DECISION OF THE CIT(A) IS NOT ACCEPTABLE BECAUSE ON ONE HAND THE CIT(A) SUSTAINED THE ACTION OF THE A.O. AP PLYING PROVISION OF SECTION 145(3) AND OTHER HAND HE DELET ED THE ENTIRE ADDITION MADE BY THE A.O. HENCE, BOTH FACTS ARE CONTRADICTORY TO EACH OTHER. EVEN THE A.O. HAS CONS IDERED REPLY OF THE ASSESSEE ON THE ISSUE OF MACHINERY SAL ES AND AFTER EXCLUDING SAID MACHINERY SALES AND SIZING ACT IVIRY WHICH WAS NOT IN THE EARLIER YEARS. THE AO MAKE ACT IVITY WISE G.P. RATE COMPARISON OF THREE YEARS AND HE FOU ND THAT IT(SS)A NO.61/AHD/2013 -6- G.P. RATE DURING THE YEAR UNDER QUESTION FOR TEXTURISING AND TWISTING ACTIVITY WAS 7.74 % AS AGAINST AVERAGE OF 16.24 % AND YARN AND FABRIC ACTIVITY WAS 1.37% AS A GAINST AVERAGE G.P. OF 1.86%. WHILE DECIDING THE APPEAL SA ID COMPARISON IS TOTALLY IGNORED AND HE DID NOT GIVING ANY WORKING ON THE BASIS OF WHICH THE CIT(A) COME TO TH E CONCLUSION THAT COST OF THE MATERIAL HAS BEEN INCRE ASED IN COMPARISON TO LAST YEAR WHICH ADVERSELY AFFECTED TH E G.P. RATE FOR THE YEAR UNDER QUESTION. 4. BEFORE US, THE LEARNED DR SUPPORTED THE ORDER OF THE AO, WHEREAS, THE LEARNED AR OF THE ASSESSEE FULLY JUSTI FIED THE ORDER OF THE CIT(A). 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE AO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ESTIMATED THE INCOME BY APPLYING THE A VERAGE OF THE GP RATES OF THREE ASSESSMENT YEARS 2008-2009, 2009- 2010 AND 2010-11 WHICH WORKED OUT TO 16.24% AND REDUCING THE GP RATE OF 7.74% SHOWN BY THE ASSESSEE IN TEXTURISING & TWI STING ACTIVITY AND APPLIED THE DIFFERENCE OF 8.5% ON THE TURNOVER OF ` 10,19,57,000/- AND MADE ADDITION OF ` 86,66,345/- TO THE INCOME OF THE ASSESSEE. SIMILARLY, BY TAKING THE AVERAGE GP RATE OF THREE YEARS WHICH WORKED OUT TO 1.86% AND REDUCING THEREF ROM GP RATE OF 1.37% SHOWN BY THE ASSESSEE, WORKED OUT A DIFFER ENCE OF GP OF AT 0.49% FROM THE ACTIVITY OF YARN AND FABRIC TR ADING, AND APPLYING THE SAME TO THE TURNOVER OF ` 37,89,05,000/-, MADE ADDITION OF 18,56,635/-. IN THIS WAY, THE AO MADE T OTAL ADDITION OF ` 1,05,22,980/-. IT(SS)A NO.61/AHD/2013 -7- 6. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS UN DER: 5.2 THE GROUND OF APPEAL NO.2 IS AGAINST THE REJEC TION OF BOOKS OF ACCOUNTS U/S.145(3) OF THE I.T.ACT. IT IS UNDISPUTED FACT THAT THE APPELLANT HAS MADE DISCLOSURE OF UNAC COUNTED INCOME OF RS.3,40,00,000/- AND WHILE EXPLAINING THE REASONS FOR FALL IN GROSS PROFIT IN THE CURRENT YEA R, THE APPELLANT HAS EXPLAINED THAT THE FALL IN G.P. BY 5. 07% IN PRE SEARCH PERIOD IS COVERED BY THE DECLARATION OF ADDITIONAL INCOME. THE APPELLANT HAS ADMITTED THE SUPPRESSION OF INCOME BY SHOWING LOWER G.P. IN THE PRE SEARCH PERIOD' THEREFORE, IT IS PROVED THAT THE BOO KS OF ACCOUNTS ARE NOT CORRECT AND COMPLETE TO THE SATISF ACTION OF THE ASSESSING OFFICER. THEREFORE, IT IS HELD THAT T HE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE BO OKS OF ACCOUNT U/S.145(3) OF THE I.T.ACT. THUS, GROUND OF APPEAL NO.2 IS DISMISSED. 5.3 THE THIRD GROUND OF APPEAL IS AGAINST THE ADDIT ION OF RS.1,05,22,980/- BY ESTIMATING GROSS PROFIT RATE OF 16.24% & 1.86% BY MAKING THE ADDITION BY APPLYING THE DECI SION OF THE ITAT AHMEDABAD IN THE CASE OF M/S.WHITELINE CHEMICALS VS ITO. IT IS UNDISPUTED FACT THAT THE AS SESSING OFFICER HAS NOT POINTED OUT ANY DEFECTS IN THE BOOK S OF ACCOUNT FOR THE POST SEARCH PERIOD, NO EXCESS STOCK OR SHORTAGE OF STOCK WAS FOUND DURING THE SEARCH AND N O INCRIMINATING MATERIAL WAS FOUND ON THE BASIS OF WH ICH ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER. TH E APPELLANT HAS FILED WORKING OF G.P. FOR THE PRE SEA RCH PERIOD AND POST SEARCH PERIOD. THE UNIT WISE G.P. W ORKING HAS BEEN FILED BY APPLYING G.P. RATE OF ASSESSMENT YEAR 2009-10 WHICH IS MORE THAN THE AVERAGE G.P. RATE OF 16.24% & 1.86% APPLIED BY THE ASSESSING OFFICER. TH E APPELLANT HAS MADE DISCLOSURE OF RS.3,40,00,000/- D URING THE SEARCH AND THE SAME HAS BEEN OFFERED IN THE RET URN OF INCOME FOR TAXATION. THE FALL IN G.P. BY APPLYING E ARLIER IT(SS)A NO.61/AHD/2013 -8- YEAR'S G.P. RATE COMES TO RS.113.06 LACS AS AGAINST THE DISCLOSURE OF ADDITIONAL INCOME OF RS.340.00 LACS. THE FALL IN G.P. OF RS.113.06 LACS IS MUCH LESS THAN DISCLOS URE OF RS.340.00 LACS MADE DURING THE SEARCH AND MOREOVER OVERALL COSTS OF GOODS SOLD TO SALES RATIO WAS 83.0 5% IN A.R.2010-11 COMPARED TO 77.87% IN A.Y.2009-10. IN VIEW OF THE ABOVE FACTUAL POSITION OF DISCLOSURE OF ADDITIONAL INCOME OF RS.340.00 LACS AND THE WORKING OF INCREASE IN COST OF GOODS SOLD DUE TO INCREASE IN P URCHASE PRICES OF RAW MATERIALS, IT IS HELD THAT THE APPELL ANT HAS SUCCESSFULLY EXPLAINED THE REASONS FOR FALL IN G.P. IN THE PRE SEARCH PERIOD. ADMITTEDLY, IN THE POST SEARCH P ERIOD, THE G.P. WAS 13.79% AS COMPARED TO G.P. RATIO OF 14 ,70% FOR THE FULL YEAR PERTAINING TO A.Y.2009-10. THE FA LL IN G.P. IS COVERED BY THE DISCLOSURE OF UNACCOUNTED INCOME OF RS.340.00 LACS AND THE REASONS FOR BALANCE FALL IN G.P. IS PROPERLY EXPLAINED BY THE APPELLANT DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS AS WELL AS THE APPELLATE PROCEEDINGS. IN VIEW OF THE ABOVE FACTS, IT IS HELD THAT THE ASS ESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION ON LY THE GROUND OF FALL IN G.P. IN COMPARISON WITH THE EARLI ER YEAR WITHOUT SPECIFICALLY POINTING OUT ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH OR ANY SPECIFIC DE FECTS IN PURCHASES OR SALES IN THE POST SEARCH PERIOD. THE R ATIO APPLIED BY THE ASSESSING OFFICER FOR WORKING OUT TH E ADDITION OF RS.1,05,22,980/- IS ALSO NOT APPLICABLE IN VIEW OF THE DISTINGUISHABLE FACTS IN THE APPELLANT'S CAS E. IN THE CASE OF WHITELINE CHEMICALS, THE ASSESSEE DISCLOSED HUGE LOSS IN THE POST SURVEY PERIOD WHICH WIPED OUT THE DISCLOSURE MADE IN THE COURSE OF SURVEY. IN THAT CA SE, THE G.P. RATE FOR PRE SURVEY PERIOD CAME TO AROUND 33% WHEREAS IN THE POST SURVEY PERIOD, THE G.P. OF 33% HAS FALLEN TO (-) 2.87% DURING THE PERIOD OF 6 MONTHS A FTER SURVEY. IN THE CASE OF THE APPELLANT, THE G.P. FOR POST SEARCH PERIOD I.E. AFTER JANUARY,2009 COMES TO 13.7 9% AND THIS FACT HAS NOT BEEN DENIED BY THE ASSESSING OFFICER. IT(SS)A NO.61/AHD/2013 -9- THE DISCLOSURE MADE BY THE APPELLANT DURING THE SEA RCH HAS NOT BEEN WIPED OFF. THE FINAL TAXABLE INCOME WA S REDUCED BECAUSE OF ADDITIONAL CLAIM OF DEPRECIATION OF RS.203.40 LACS [ RS.385.70 LACS IN A.Y.2010-11 RS.182.30 IN A.Y.2009-10 ] AND THE SAME HAS NOT BEE N DISPUTED BY THE ASSESSING OFFICER, SO THE FACTS OF BOTH THE CASE ARE TOTALLY DIFFERENT. IN THE CASE OF THE APPE LLANT, THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD TO SHOW THAT THE GROSS PROFIT RATIO OF THE A PPELLANT WAS REDUCED SUBSTANTIALLY WITHOUT ANY CONVINCING RE ASON. ON THE CONTRARY, THE APPELLANT, BY FILING SPECIFIC WORKING OF INCREASE IN THE COST OF GOODS SOLD IN THE FORM O F DETAILED CHART, HAS ESTABLISHED BEYOND DOUBT THAT THE COST O F GOODS SOLD TO SALE RATIO WAS 83.05% IN A.Y.2010-11 AS COM PARED TO 77.87% IN A.Y.2009-10. THE INCREASE IN COST OF G OODS SOLD TO SALE IS MAINLY ON ACCOUNT OF HIGHER INCREAS E IN PURCHASE COST AS COMPARED TO INCREASE IN SALE. IN VIEW OF THE ABOVE FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE WORKING SUBMITTED BY THE APPELLANT, IT IS H ELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING T HE ADDITION OF RS.1,05,22,980/- BY ESTIMATING G.P. RAT E AT16.24% AND 1.86% BY FURTHER APPLYING THE RATIO LA ID DOWN IN THE CASE OF M/S.WHITELINE CHEMICALS VS ITO. THUS, THE ADDITION OF RS.1,05,22,980/- IS ACCORDINGLY DEL ETED. 7. NO SPECIFIC ERROR IN THE ORDER OF THE LEARNED CI T(A) COULD BE POINTED OUT BY THE LEARNED DR. THE REVENUE IN T HE STATEMENT OF FACTS QUOTED ABOVE IN THIS ORDER, POINTED OUT TH AT IN PRE-SEARCH PERIOD THE GP RATIO COMES TO 8.6% AND IN THE CASE O F POST-SEARCH PERIOD THE GP RATIO COMES TO 13.9% AS COMPARED TO T HE GP RATIO OF 14.7% FOR THE FULL YEAR PERTAINING TO LAST YEAR. THE LEARNED CIT(A) OBSERVED THAT LOW GP RATIO DURING PRE-SEARCH PERIOD IS COVERED BY THE DISCLOSURE OF ` 3.40 CRORES MADE DURING THE COURSE OF SEARCH AND INSPITE OF SLIGHT DECLINE IN THE GP R ATE IN THE POST- IT(SS)A NO.61/AHD/2013 -10- SEARCH PERIOD COMPARED TO THE LAST YEAR, THE CIT(A) FOUND THAT PROPORTIONATE INCREASE IN THE COST OF RAW MATERIAL WAS MORE THAN THE PROPORTIONATE INCREASE IN THE SALE PRICE, AND T HEREFORE, SLIGHT DECLINE WAS JUSTIFIED. IN THE ABSENCE OF ANY MATER IAL BEING BROUGHT ON RECORD BEFORE US, TO CONTROVERT THE ABOV E FINDINGS OF THE LEARNED CIT(A), WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). THEREFORE, T HIS GROUND OF THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT /JUDICIAL MEMBER . .. . . . . . /N.S. SAINI /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD