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2014 (9) TMI 1124 - AT - Income TaxAddition on account of lower gross profit - rejection of books of account - adoption of correct rate - Held that:- In a case where the books of accounts are rejected and the turnover is to be estimated on the basis of best judgment assessment, the overall facts and circumstances of the case have to be considered e.g. the nature of business of the assessee and the volume of the business for the entire year etc. etc. A reasonable and fair view should be adopted in estimating the turnover. As observed above, the ld. CIT(A), while restricting the GP rate at the rate of 9%, has taken into consideration the overall facts and circumstances of the case and also the considerable increase in the turnover of the assessee as compared to previous years. We do not find any infirmity in the order of the ld. CIT(A) on this ground. Disallowance of expenditure - Held that:- Neither the disallowance made by the AO nor the action of the ld. CIT(A), in deleting the disallowance made by the AO in respect of expenditure, without verification of the bills, vouchers etc., was justified. So we set aside the order of the ld. CIT(A) on this issue and restore the matter to the file of the AO with a direction that AO will verify the correctness etc. of the expenditure claim and thereafter to decide the issue afresh in accordance with law. Unexplained cash credit under section 68 - CIT-A allowed the claim - Held that:- We are of the view that the action of the ld. CIT(A) in deleting the additions on account of unexplained cash credits without verifying the genuineness of the transactions and creditworthiness of the creditors etc. was not justified. So, in our view, the interest of justice will be well served, if, the issue is restored to the file of the AO with a direction to examine the same afresh and decide the same after giving necessary opportunity to the assessee to prove the genuineness and creditworthiness etc. of the creditors. Validity of best judgment assessment under section 144 - Held that:- AO had given ample opportunity to the assessee to produce the necessary details. When in a case, the assessee relies upon certain documents and records in the shape of books of accounts, bills, vouchers etc. and the AO requires the production of such documents for the purpose of verification of the genuineness and correctness of those documents, a duty is cast upon the assessee to produce the relevant documents. The excuse that it was difficult to produce the entire records before the AO, in our view, is not a valid excuse, when a statutory duty is cast upon the assessee to produce the necessary details as may be called upon by the Income Tax Authorities. Under such circumstances, in our view, the AO has rightly made the best judgment assessment under section 144 of the Act. Hence, we do not find any merit in the appeal of the assessee
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