GROSS PROFIT RATE –Application of section 145(3) OF THE INCOME TAX ACT
SYNOPSIS
COMPONENTS OF GROSS PROFIT
WHEN GROSS PROFIT RATE IS LOWER THAN PREVIOUS YEAR
DEFECTS IN BOOKS OF ACCOUNTS
APPLICATION OF SECTION 145(3)
MAINTENANCE OF STOCK REGISTER
APLLICATION OF SECTION 145(3) AND STATUTORY DEDUCTIONS
SYNOPSIS
The purpose of this article is to examine the situation where trading results declared by the assessee in the books of accounts is not accepted by the Income Tax department for defects in the books of accounts and when there is low Gross Profit Rate as compared to previous year.
Gross profit rate is a very important aspect of any scrutiny assessment u/s 143(3) of the Income Tax Act. Whenever any case is taken up for scrutiny the first question arises about the trading result of the assessee as compared to the preceding years.
Before I proceed about taxation issues let us first understand the components of Gross profit::
