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2008 (2) TMI 896 - ITAT MUMBAISurvey conducted u/s 133A - Estimation of sale - arrived at based on extrapolation technique - record of earlier 5 days sales - bills and chits of paper found - rejection of books of account - whether the AO could be right in estimating the sales and profits, based on the sales of 5 days recorded in the books of account and making an assessment without rejecting the books in question? - Allegation that sale of liquor which is a controlled item under Excise Act is suppressed cannot be done in a light manner without evidence. This is a case where no investigation whatsoever has been made. The figure of sales of 5 days' was taken and simply multiplied with 350 days and turnovers estimated for five years. HELD THAT:- Not finding of the books of account during the course of survey, in the restaurant premises, in our humble opinion, cannot draw a conclusion that the assessee is not maintaining books of account. The assessee's books of account have been audited regularly and returns of income filed along with balance sheets and P&L a/c. AO should have pointed out defects and recorded reasons as to why he was inclined to reject the books of account. In this case when there is no rejection of the books of account at all, we are of the opinion that the CIT(A) was in error in coming to the conclusion that impliedly the AO rejected the books of account. What the AO has done is took the income declared as per the return of income and added further the GP rate of 70.79 per cent on the estimated suppression of sale. This, in our considered opinion, is not correct. No material is brought on record to support such an action by the Revenue. Therefore, the assessment orders passed by the sales-tax authorities which record that the turnovers of the assessee are at a particular figure based on the verification of its books of account and in view of the lack of investigation or evidence to contradict the submissions of the assessee or the orders of another Government agency, we are inclined to agree with the arguments of the learned counsel for the assessee and delete the addition made in this regard. Thus the estimation of turnovers for both the assessment years based on only a small sample figure is not well founded and has to be necessarily quashed. In the result, the appeals filed by the assessee for both the assessment years are allowed.
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