Additions not valid merely on the ground of fall in GP ratio, if books of account are accepted by AO

Brief Facts of the Case         Assessee, a partnership firm, was engaged in the business of manufacturing of enameled wire, submersible wire, bare copper wire etc. Assessee filed its return of income related to AY 2009-10 declaring gross loss of (-)3.65% against the total turnover of Rs.590703526/- with net loss of Rs.36385885/- Gross Profit ratio of assessee for immediately two preceding assessment years 2008-09 and 2007-08 was 5.48% and 5.47% respectively. AO computed income of the assessee estimating Gross profit at 3.65% (2/3rd of preceding year GP) for the year under considerati...