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2014 (4) TMI 426 - AT - Income TaxRejection of book results – Estimation of Gross profit @ 22% instead of 21.15% - Held that:- The loss of fire and expenses are debited by the assessee in its Profit & Loss Account and not in the Trading Account - the items do not affect the working of the Gross Profit of the assessee – the AO as well as the CIT(A) has observed that the yield of the assessee was not verifiable - No material has been brought on record by the assessee to show that the yield of the assessee was verifiable from the books of accounts and records maintained by the assessee. The AO has estimated the gross profit of the assessee after rejecting the books of accounts at the rate of 23.04% which was the gross profit rate shown by the assessee itself in the immediately preceding assessment year 2005-06 - The CIT(A) estimated the rate of gross profit of the assessee at 22% without any basis - the rejection of books of accounts by the AO was fully justified as no material was brought on record to show that the yield of the assessee was verifiable - the average of gross profit rate shown by the assessee in the immediately preceding two assessment years i.e. 2004-05 and 2005-06, and after including the gross profit rate for the assessment year 2006-06, works out to 21.79% - thus, the order of the CIT(A) is modified and the AO is directed to re-compute the income of the assessee by adopting the Gross Profit rate of the assessee at 21.79% - Decided partly in favour of Assessee.
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