SH. MOTI JAIN,NEW DELHI vs. ITO, NEW DELHI

The assessee has raised various grounds. The first ground of appeal is with regard to addition of `10,33,445/- on account of low gross profit rate.

We have considered the rival submissions and have perused the relevant material placed before us. The assessee derives income from the business of different types of hosiery items. For the year under 2 ITA-647/Del/2014 consideration, on the turnover of `1.78 crores, the gross profit disclosed was `15.10 lakhs. The gross profit rate was 8.47% as compared to the gross profit rate of preceding two years which was 22.56% and 26.26% for assessment year 2005-06 and 2006-07 respectively. It was explained by the learned counsel that due to increased cost of purchases and competition in the market, there was fall in the gross profit. It was also stated that in the subsequent year, the similar gross profit is accepted.

Learned DR, on the other hand, stated that during the year under consideration, the assessee did not produce the books of account and supporting bills, vouchers etc. and, therefore, the rejection of books of account and application of gross profit rate of 14.23% by the Assessing Officer is quite fair and justified. The same should be sustained.

In the rejoinder, it is stated by the learned counsel that the gross profit rate applied is too high specially in the light of the result of the subsequent years which has been accepted by the Revenue.

We have carefully considered the rival contentions and have perused the relevant material placed before us. After considering the facts of the case and arguments of both the sides, in our opinion, it would meet the ends of justice if the lump sum addition of `5,00,000/- is made to the trading result as against `10,33,445/- made by the Assessing Officer. We order accordingly.

Ground Nos.2 & 3 are against the adhoc disallowance out of car, telephone, travelling and other expenses. After considering the facts of the case and arguments of both the sides, we do not find any merit in these grounds of appeal. It is a case of an individual and some

3 ITA-647/Del/2014 personal use of telephone, car etc. cannot be ruled out. The disallowance made by the Assessing Officer is quite reasonable. Accordingly, the same is sustained and ground Nos.2 & 3 are rejected.

In the result, the appeal of assessee is partly allowed. Decision pronounced in the open Court on 05.02.2016.