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2009 (8) TMI 757 - AT - Income TaxRejection of books of accounts - Assessment u/s 143(3) r/w 153A - estimation of income - percentage of net wealth / net worth - retraction of statement - Held that: income is generally arrived at based on 'income method' or 'net asset method'. - It cannot be said the adoption of net asset method is an impossible view. This is a permissible view. Net worth method is a recognized method of accounting in the absence of proper maintenance of books of accounts on the basis of which profits of the year can be determined. Undisputedly in the instant case, no books of accounts are maintained by the assessees. Under these circumstances, only two options are left with the assessees, either to compute the profit by applying the net profit rate to the gross receipts, or by taking the net worth basis. The reasons for rejecting the net worth basis do not appear to be reasonable because they are not based on some documentary evidence. - If the assessee has earned some profit or income it must have been spent in acquisition of wealth. So far as withdrawal towards the personal expenses are concerned, we find from the statement of the assessee that he has been regularly showing the withdrawal in every year the dispute was raised with regard to the quantum of withdrawal. In the absence of any evidence, it is also a question of estimate. Decided in favor of assessee - matter remanded back to AO with a direction to accept the profit of the year shown by the assessees on the basis of the net wealth method.
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