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2012 (10) TMI 48 - AT - Income TaxRejection of books of accounts u/s 145 Calculation of profit by applying Net Profit ratio Whether AO in making best judgment assessment u/s 144 has possess absolute arbitrary authority to assess any figure he likes - Assessee engage in construction business Labour expense constitute 37% of total expense Vouchers do not contain details like labour rate, working days etc. Cash payment of labour expense amounting Rs. 1.39 cr. out of total exp. of labour of Rs. 7.47 cr. - Cash payment were made of only 20% of total labour exp. Held that:- Assessee working at 21 sites during the year and most of the labour was unskilled and illiterate, dont have permanent address, not have bank account. Net Profit rate shown by assessee was on higher side in comparison to earlier years. On the basis of decided case of Brij Bhushan Lal Parduman Kumar(1978 (10) TMI 2 - SUPREME COURT) that even in the case of best judgment assessment u/s 144, the same has to be done on reasonable basis and it should not be vindictively or capriciously. Therefore, AO is not justifying in rejection of books and applying NP rate. Treating Foreign expenses as bogus AO contended that it does not have any relation with the business need Held that:- As the assessee furnished break-up details of local and foreign traveling of the partners. No family members accompanied the partners and that by itself is sufficient to show that the expenditures are for business purpose. Visits to foreign country were made to know for its high standard urban infrastructure like Hong Kong, Malaysia which led to increase of knowledge of recent technology in construction business. Further, the machinery was purchased from abroad in the later years. Therefore, same cannot be treated as bogus. Appeal decides in favour of assessee
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