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2014 (5) TMI 387 - AT - Income TaxEstimation of income – Low GP declared – Rejection of Books of accounts - Entitlement for deduction u/s 80C and 80D of the Act – Held that:- Assessee contended that the rate of net profit is very low on the reason that earlier year job work charges were included in the trading account and for this assessment year it was accounted in Profit and Loss A/c - even if the argument of assessee is accepted, the net profit rate cannot go so less at 0.54% - the expenditure is not properly vouched and also assessee has not given proper explanation for low gross profit - estimation of income on the basis of gross profit is not proper - The AO should have compared the net profit rate of previous years for the discrepancies noticed in the books of account of the assessee. Considering the discrepancies in the books of account rejection of books of account is proper - estimation of income of the assessee on the basis of the gross profit is not proper – thus, the order is modified and the AO is directed to estimate the income of the assessee on the basis of average net profit rate for AYs. 2007- 08 and 2008-09 as the past records could be the basis for estimation of income of the assessee – the AO is directed to estimate income of the assessee at 1.22% of gross receipts - there cannot be any addition after estimating the income of the assessee - The assessee shall produce necessary details before the AO regarding the claim for deduction u/s. 80C and 80D of the Act – Decided partly in favour of Assessee.
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