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It was submitted by the appellant that in view of the above calculation, the trading addition of Rs. 28,92,456/- is not justified as the G.P. rate has been increased as compared to last year.

4 ITA 166/JP/2017_ Surendra Kr. Pancholi Vs. ITO

(iii) I have duly considered the submission of the appellant, assessment order and the material placed on record. I have also examined the assessment records of the appellant for the AY 2009- 10 and 2010-11. It is noted that in Tax Audit Report for the year under consideration, the Auditor has taken the gross profit at Rs. 21,25,245.50 while computing the GP ratio whereas as per the above working submitted by the appellant, which is also verified from the Profit and Loss account of the appellant for the year under consideration, the gross profit was to the tune of Rs. 51,25,245/- and consequently, the GP rate worked out to 23.98%, which is better than the GP rate declared for the immediate preceding year but on decreased sales. It appears that some typographical error was made by the Auditor while computing the GP ratio in the Tax Audit Report for the year under consideration. However, I think it would be proper to take GP rate at 27% as the turnover has decreased [almost 20%) because it is trite law that with increase in turnover, there is fall in GP rate and vice versa. Therefore, the trading addition is restricted to Rs. 6,44,685/- (57,69,930 - 51,25,245), Thus, this ground of appeal is partly allowed."

9. The Bench have heard both the sides on this issue. The Assessing Officer has worked out the gross profit rate @ 9.94% while the ld.

CIT(A) has accepted the assessee version regarding the G.P. rate @ 23.98%. The ld. CIT(A) has not given any opportunity to the A.O. to verify the veracity of the claim of assessee. Further the ld. CIT(A) has also adopted G.P. rate @ 27% for the reason that there was a decrease in the turnover without providing opportunity to the assessee in contravention of the provisions of law. Therefore, considering the totality of the facts and circumstances of the issue in appeal, we find deem it fit and just to restore the issue to the file of the ld. CIT(A) to be decided de novo after providing reasonable and effective opportunity of being heard to both the sides.