Addition cannot be made solely on the basis of Low G.P. Ratio

Assessing Officer made the addition merely on the ground of low gross profit rate. In our opinion, the low gross profit rate can be a reason for making an enquiry but, it cannot be the sole basis for making the addition. The trading result can be rejected only if the condition prescribed under Section 145 for the rejection of books of account or the method of accounting is fulfilled. The Assessing Officer has not recorded the finding that the books of account of the assessee are required to be rejected in terms of Section 145. However, since we are setting aside the issue relating to cash cred...