Diva Singh, J.M. - (1.) THIS is an appeal filed by the Revenue against the order dt. 3rd July, 1998 of CIT(A)-II, Meerut (Camp Ghaziabad) pertaining to 1995-96 assessment year.
(2.) The grounds raised by the Revenue read as under: "1. The learned CIT(A) has erred in law and on facts in allowing the relief of Rs. 8,76,000 out of total addition in the trading account of Rs. 11,26,000 by directing to take sales at Rs. 25 lakhs and GP rate of 10 per cent ignoring the fact that the assessee had not produced the books before the AO and therefore, the AO was justified in estimating the sales at Rs. 50 lakh as against sales shown at Rs. 23,37,919 in view of facts and circumstances of the case. 2. The learned CIT(A) has erred in law and on facts in allowing the relief mentioned at para No. 1 by directing to take GP at 10 per cent as against GP rate of 22.52 per cent taken by the AO and shown by the assessee itself for asst. yr. 1994-95 ignoring the fact that the fire broke out in the assessee's business premises on 8th June, 1994 and out of total sales shown at Rs. 23,37,919 sales amounting to Rs. 15,15,864 pertain to pre-fire period and sales amounting to Rs. 8,22,055 pertain to post-fire period. For the pre-fire period, the directions of CIT(A) regarding application of GP of 10 per cent is not justified as the GP rate of 22.52 per cent shown by the assessee last year is justifiably applicable. Even for the post-fire period, the GP rate of 22.52 should be applied as GP rate shall not be affected due to this factor, The learned CIT(A) has directed to apply GP rate of 10 per cent because of loss of stock worth Rs. 20 lakhs due to fire ignoring the fact that the assessee has credited the insurance claim of Rs. 20 lakhs in its trading account and thus, there is no reason as to why GP rate should decline. Therefore, learned CIT(A) was not justified in directing to apply GP rate of 10 per cent. The learned CIT(A) has erred in law and on facts in allowing relief of Rs. 1,90,707 out of total disallowance of Rs. 3,30,993 in respect to repair and maintenance of machinery, building, etc. as well as in holding that item of Rs. 1,04,286 (repair of hot press pump) should be treated as part of plant and machinery ignoring the fact that the assessee failed to produce any documentary evidence in respect of these expenses except for repair expenses of Rs. 1,04,286 on the hot press pump.
(3.) THE learned CIT(A) has erred in law and on facts, in deleting the disallowance of Rs. 5,46,507 on account of insurance claim recoverable ignoring the fact that the assessee has not produced books nor any other evidence before the AO to prove its claim that this amount has been written off in the books.;