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2012 (8) TMI 14 - AT - Income TaxAdditions on account of estimation of gross profit rate @28% on the unaccounted turnover – Held that:- AO could not adduce any cogent reason for applying the higher GP rate of 28% - assessee has declared GP rate of 13.06% to 21.76% in various assessment years 1998-1999 to 2003-2004 which shows an average rate of GP at 18.36% - No reason to justify the higher GP rate of 28% was given by the AO - AO directed to work out the addition on account of GP on undisclosed turnover - Revenue’s appeals is partly allowed. Additions on account of unaccounted investment being 1/6th of initial unaccounted capital - assessee has contended that this investment is to be made in the first month and there is a turnover of remaining period - assessee has also contended before the AO that its business cycle period of one time turnover is 25 to 35 days – Held that:- It would be reasonable to estimate unaccounted initial investment at 1/12th of unaccounted invested capital as against 1/6th thereof estimated by the AO - Revenue’s appeals are partly allowed.
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