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2014 (7) TMI 372 - ITAT MUMBAIRejection of books of accounts – Rate of NP @ 15% in place of 11.39% - Held that:- After pinpointing incompleteness of books and certain defects in the books of accounts and also making observation with regard to the deposit and withdrawal of cash in the account of Director Hardeep Singh Chaddha and also pointing out absence of supporting evidence in respect of cash expenditure incurred by the assessee and factum of cash loan of ₹ 2.00 lacs from Director Ravikaran Singh Chaddha, the AO has rejected the book results and applied the net profit rate of 15% in place of net profit rate of 11.39% shown by assessee. In the earlier five assessment years, the assessee had shown net profit rate of 5.28% to 11.63% - during the year under consideration the assessee had shown net profit rate of 11.39% - there is no justification for applying the net profit rate of 15% - there was no justification in the AO’s order for applying net profit rate of 15% on gross receipts - the cash expenditure incurred by the assessee for which the AO observed that assessee did not furnish evidence to substantiate the expenditure is certainly going to effect the net profit disclosed by the assessee in the books of accounts - there is adverse observation made by the AO with regard to the genuineness of job work undertaken from M/s Unique Enterprises - the observation made by the AO vis-à-vis the findings recorded by the CIT(A) with regard to the rejection of books of account and sustaining the trading addition to ₹ 17,00,000/- shown by assessee is modified – thus, the issue with regard to the incurring of cash expenditure which is not supported by bills and genuineness of job work undertaken from M/s Unique Enterprises and issue of cash loan of ₹ 2.00 lacs from Ravi Karan Singh Chaddha is remitted back to the AO for fresh examination – Decided partly in favour of Assessee.
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