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2013 (8) TMI 946 - AT - Income TaxEstimation of income at the rate of 5% net profit on gross receipt - Held that:- No infirmity in the findings of the AO in rejecting the books of account. Therefore, the rejection of books of accounts is upheld. We further noted that the assessee did not maintain proper vouchers etc. and, therefore, no recourse was left with the AO except applying the profit on the basis of best judgment. In immediately preceding year, the turn over of the assessee on which the profit was shown at 3.37%, whereas in the year under consideration the AO applied 5%. In our view, the net profit rate applied by the AO is not exorbitant. Therefore, we confirm the application of NP rate of 5% on the facts of the present case. Addition under Section 41(1) - Held that:- We found that the assessee deserves to succeed in this ground. Firstly, once the AO has applied the net profit rate then no further addition can be made as held by the Hon’ble Allahabad High Court in the case of CIT Vs. Banwari Lal Banshidhar (1997 (5) TMI 37 - ALLAHABAD High Court ). Even on merit, we noted that how the liability on account of sundry creditor is ceased to exist is not borne out from the facts of the case. Therefore, for this reason also, the application of provision of Section 41(1) were not justified.
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