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17. We have considered the rival submissions and also perused the relevant material on record. It is observed that the value of opening stock and closing stock disclosed by the assessee was found to be unverifiable by the AO in the absence of qualitative and quantitative details of diamonds maintained by the assessee.

Similarly, the purchases shown by the assessee were found to be not fully verifiable by the AO as a result of returning back of the notices sent to the 10 suppliers and the failure of the assessee to produce the said parties for examination along with their books of account, stock record etc. Having regard to these specific defects pointed out by the AO coupled with the fact that the GP declared by the assessee was very low at 1.03% which the assessee failed to satisfactorily explain, we are of the view that the action of the AO in rejecting the book results was fully justified and the learned CIT(Appeals) was right in upholding the same. As regards the GP rate of 4% applied by the AO, the learned counsel for the assessee has relied on the decision of Sunderam Gems P. Ltd. (supra) to contend that GP rate of 2.82% shown in the said case from the similar business was accepted by the Tribunal. It is, however, observed that the action of the AO in rejecting the book results in the said case was found to be unsustainable by the Tribunal and, therefore, there was no occasion for the Tribunal to decide the issue relating to reasonability of GP rate declared by the assessee. Moreover, the turnover of the assessee in the said case was Rs.33.10 crores while the turnover of the assessee in the present case for the year under consideration was only Rs.4.86 crores. In this regard, it is pertinent to note that in the comparable case of M/s V. Kapoor Jewellers P. Ltd. cited by the AO, the GP rate disclosed by the assessee was 10.86%. However, keeping in view that the turnover of the assessee in the said ITA Nos.5567,5568/Mum/2009, case was only 1.71 crores as against Rs.4.85 crores of the assessee, the AO applied a GP rate of 4% on the ground that when the turnover increases, GP rate decreases. Having regard to all these facts, we are of the view that the GP rate of 4% applied by the AO was fair and reasonable and the learned CIT(Appeals) was fully justified in confirming the trading addition made by the AO by applying the said GP. In that view of the matter, we uphold the impugned order of the learned CIT(Appeals) on this issue. The AO, however, is directed to consider the alternative claim of the assessee as made by the learned counsel for the assessee before us of allowing the benefit of telescoping of trading addition with the addition to be made on account of peak credit after verifying the relevant facts.