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As such the learned CIT (A) has given a contrary finding by accepting the books of accounts on the one hand and making ad hoc addition on the other hand. Accordingly, in the backdrop of the aforesaid discussion and precedent, we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him.

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Sec. 145 of Income Tax Act, 1961 – Rejection of books of account – The assessee filed the appeal against the order of CIT(A) arising in the matter of assessment order passed under s. 143(3) of the the Act to the A.Y. 2011-2012. The only issue raised by the assessee is that the CIT (A) erred in partly confirming the addition of Rs. 10 lakhs out of the total addition made by the AO at Rs. 1,22,03,041/- on account of understatement of the sale price. It is well-settled business proposition that for having increase in sales, a businessman has to sacrifice a small margin of profit rate. The assessee placed on record the order of the Tribunal in the assessee's own case in the assessment year 2001-02 wherein addition made by the Assessing Officer by applying GP rate of 10.14 per cent was deleted by the Tribunal and the GP rate of 9.64 per cent declared by the assessee was found to be reasonable and correct. As the facts and circumstances during the year under consideration were the same, the issue was squarely covered by the order of the Tribunal in the preceding year. ITAT while allowing the appeal held that:– the CIT (A) has confirmed the addition of Rs. 10 lakhs on ad hoc basis without pointing out any specific material. Ad hoc disallowance is not permissible. As such the CIT (A) has given a contrary finding by accepting the books of accounts on the one hand and making ad hoc addition on the other hand. Accordingly, set aside the order of the CIT (A) and direct the AO to delete the addition made by him – PANCHSHIL EXIM P. LTD. Vs. DEPUTY CIT [2020] 79 ITR (TRIB) 472 (ITAT-RAJKOT)