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2012 (7) TMI 553 - AT - Income TaxReopening of assessment u/s.147 of the Income Tax Act - grievance of the assessee is that the AO did not supply copies of the reasons recorded even when specifically was asked for from the A.O Held that:- Before issue of notice under the section the AO shall record his reasons for doing so. Since the AO did not provide the assessee - reopening was bad in law, hence quashed. Addition made by rejecting of books of accounts - AO directed to estimate gross profit @ 22% by adopting the average Gross Profit of last six years as against 30% estimated by the Assessing Officer Held that:- AO relied upon a part of a transaction for the preceding year while rejecting the other - This is not permissible in law - Without pointing out any error in the P&L a/c and the audited report, the powers of best judgment assessment could not be invoked. The principles of best judgment assessment do not appear to have been followed by the AO - in the absence of any specific adverse material on record, the AO was not justified in applying an adhoc gross profit rate which was rightly reduced by ld.CIT(A) addition deleted Addition made by rejecting of books of accounts Held that:- AO is directed to delete GP addition because he has not pointed out single defect in the books of account in the year under consideration - AO has neither bothered to issue a show cause notice before rejecting the accounts of the appellant firm. Application of GP rate at 30% on receipts has been made by the AO without bringing any material on record to justify it, without even caring to mention that he is applying 30% rate as against 20.89% GP rate shown by the assessee
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