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(III) Miscellaneous:-

(1) The appellant craves leave to add, alter or vary any of the grounds of appeal."

2. In brief, two issues are involved - one is about rejection of the books and other is about gross profit addition of Rs.13,33,088/-.

3. The assessee is engaged in the business of art silk cloth processing on job work basis. It has declared a gross loss of Rs.23,85,145/- and net loss of Rs.43,99,182/-.

4. During assessment proceedings, the Assessing Officer required the assessee to produce books of accounts and vouchers but assessee did not produce the basic records on the ground that they are lost in the flood. The AO dd not rely on the book results shown by assessee and proceeded to estimate the profits. He noticed that during the year under consideration gross loss is shown at 28.27% of the turnover whereas in the immediately preceding year, GP was shown at 13.64%. Thus, there was a steep fall by 41.31%. The assessee sought to explain the fall on the ground that the turnover has substantially decreased this year. Last year the turnover was at Rss.2,89,40,880/- whereas this year it is reduced to Rs.84,37,268/-. There was a fixed expenditure on management and administration which the assessee had to incur. Because of such high fixed expenditure, the assessee suffered loss. The AO noticed that on comparison of manufacturing expenses incurred in the preceding year with the expenditure incurred this year, the fall is not substantial as compared to the fall in profits. He provided following two charts:-