M/S. R.K. AGRO PRODUCTS,,DHULE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE- DHULE, , DHULE

This appeal by the assessee against the order dated 22-07-2019 passed by the Commissioner of Income Tax (Appeals)-1, Nashik [„CIT(A)‟] for assessment year 2015-16.

The only ground is to be decided is as to whether the CIT(A) justified in confirming the ad hoc addition to an extern of Rs.3,50,000/- in the facts and circumstances of the case.

We find no representation on behalf of the assessee nor any application filed seeking adjournment. The assessee called absent and set ex-parte. Therefore, we proceed to hear ld. DR and pass order basing on material available on record.

Heard ld. DR and perused the material available on record. The assessee is a firm engaged in the business of trading in food grains. The assessee declared total income of Rs.2,36,94,540/- and in scrutiny the AO added Rs.7,00,000/- on account of ad hoc addition for not substantiating fall in gross profit.

We note that the assessee filed books of account and stock register. The said books of account are audited. The contention of AO is that the gross profit declared by the assessee is much below than the gross profit declared for A.Ys. 2014-15 and 2013-14 and for not substantiating fall in the gross profit compared to A.Ys. 2014-15 and 2013-14, he added Rs.7,00,000/- on the basis of estimation. The CIT(A) restricted the addition to 50%. We find that the assessee declared gross profit @ 10.34% and 8.61% for A.Ys. 2014-15 and 2013-14, respectively whereas the current year he declared only 6.12%, in our opinion there was no finding by the AO against the books of account and stock register and even the books of account for not rejected by the authorities below. Therefore, when books of account and stock register filed and when the same were audited in the absence of any objection regarding the same, we find no substance in estimating the gross profit, having comparison to A.Ys. 2014-15 and 2013-14. Thus, the order of CIT(A) is not justified and it is set aside. The only ground raised by the assessee is allowed.

In the result, the appeal of assessee is allowed.