assessment order, the assessing officer
has picked up 4 cases where the turnover has ranged from Rs.8.13
crores to Rs.23.62 crores ... There is a
trend of decrease in G.P. as turnover goes up. Thus the fair
estimation of G.P. in the present case would
gone down only as a
percentage of the turnover which had increased, there was no decrease In
absolute terms. Without taking all these facts into
other contentions regarding decrease in direct cost to the extent of Rs.193.41 lakh and
increase in total turnover etc. were never made before ... verification regarding these two claims in connection
with decrease in direct cost and increase in total turnover.
5. We have considered the rival submissions, perused
locality, comparative
profit rate of the assessee in respect of other years, turnover,
etc. In this case, the Assessing Officer has not considered ... common knowledge that profit
ratio will decrease automatically. In other words, the profit ratio
will decrease when the turnover increases. By taking into
consideration
last year balance at Rs.25,54,378/-. Thus, the advance
had decreased during the year under consideration. Copies of all these accounts ... categorically observed that even in case of
fall in turnover there may not be proportionate decrease in the salary as the regular
employees cannot
Assessing Officer in estimating the rate of profit @ 4% of
the turnover for the trading business without making any
allowance for legitimate expenses incurred wholly ... 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
wages to cover the discrepancies. He observed that the turnover of the assessee
had decreased from 20.19 crores to Rs.6.95 crores
total turnover of Rs.6,15,15,472/-. The
Assessing Officer produced following chart for comparison:-
Year Turnover Gross Profit G.P. margin ... consumption was at Rs.85,89,851/-. Total turnover on the
other hand had decreased. The AO required the assessee to give details
During the assessment proceedings the AO found that the
turnover of the assessee has decreased as compared to the
preceding year, however, indirect expenses were ... found that expenses
incurred in the preceding assessment year were 2.89% on turnover
but in the assessment year under appeal
there was increase in manufacturing expenses by
1.92% whereas there was a decrease of cost of goods sold by 1.41%
and thus there ... this year and production of last year but the turnover has
been decreased substantially which has been stated because of fall in
selling rate
