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18.4 On the issue that no addition in GP can be made without observing errors in audited books of account, the following decisions are eloquent : 

 i)     Pandit Bros vs. CIT 26 ITR 159 ( P&H)
        ii)    CIT vs Maharaja Shree Umed Mills Ltd 192 ITR 563 (Raj)

iii) CIT vs. K.S.Bhatia 125 Taxman 454 (P &H) ITA 326/CHD/2019 A.Y. 2014-15

iv) CIT Vs Poonam Rani 326 ITR 223 18.5 On merits also, the stand taken by the assessee for the fall in GP during the year is not a totally unpalatable stand. The assessee has maintained, as noted by both the authorities below, that the major reason for fall in GP was a substantial increase in turnover by almost 50% from Rs. 60.71 Cr during the earlier year to Rs.90.74 Cr during the year under consideration; that to achieve such an increase in turnover, a business has to decrease its margins to obtain much higher sales; that the primary reason for the decrease in gross profit rate was the increase in the cost of material consumed; that there was a increase of 4.28% in the consumption of raw material as a percentage of sales compared to the earlier year and that on the other hand, other manufacturing expenses were comparable; that the cost of the raw material is beyond the control of the assessee as most of the raw material used is to be imported from other countries; that has resulted, the NP rate during the year under consideration fall by only 1.07%, even though the GP rate had decreased by 2.50%; that this ITA 326/CHD/2019 A.Y. 2014-15 shows that there was better management of resources and no trading expenses decreased as a percentage of sales.