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2014 (4) TMI 619 - ITAT AHMEDABADAdoption of Net profit against GP – Unaccounted sales – Expenses incurred over and above MRP disclosed – Held that:- The Assessee had suppressed sales and also suppressed the expenses and in view of these facts, the books of accounts of the Assessee cannot be relied and was therefore rightly rejected u/s 145(3) of the Act by the AO - Once the books of accounts of the Assessee are rejected, a fair estimate of the profits needs to be made - AO while estimating the profits of Assessee has noted even DGCEI has noted that not only MRP was reduced for the purpose of excise duty but also complete expenses/costs with respect to purchase of raw materials and other expenses were shown at a lesser amount which therefore showed that the entire expenses were also not recorded in the books of account - The finding of AO could not be controverted by Assessee by bringing any tangible material on record. The CIT(A) has adopted Net Profit rate of 15.15% for A.Y. 06-07 as compared to 19.51% for A.Y. 05-06 - When the books are rejected, there is no justification for adopting the Net Profit of 15.15% for A.Y. 06-07 which is lower than the rate of 19.51% for A.Y. 05-06 which has been considered for estimation of income - the estimate of G.P. made by A.O. @ 40% was on a higher side but at the same time the action of CIT(A) in considering the Net Profit rate was also not fully justified and the fact that the present appeal is of Revenue and Assessee is not in appeal - the profits for both the years to be on the basis of 20% of Gross profits as against 40% made by AO – Decided partly in favour of Revenue.
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