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2012 (12) TMI 1 - AT - Income TaxEstimation of net profit - rejection of books of accounts - failure to produce the books of accounts - difference of opinion - third member decision - held that:- It is not in dispute that the assessee maintained books of account and they were duly audited under section 44AB of the Act. In fact the Legislature places an obligation on the assessee, whose turnover is above Rs. 40,00,000/-, to maintain proper books and to obtain a tax audit report. It is not the case of the assessee, at any stage, that it has not maintained the books of account. Once it is not disputed, either by the assessee or by the Revenue, that assessee maintained books of account, the next issue to be considered is whether the AO can arbitrarily reject the book results and estimate the profit in the event of non-production of bills and vouchers. Assessee merely made a statement that the books of account were impounded by the local police but no evidence, whatsoever, was furnished to support the plea. The learned counsel submitted before me that the premises was seized in November 2005 but the attachment was lifted on 24.01.2006. If the attachment was lifted by a court order it could not have been difficult for the assessee to produce some evidence in that regard but no such evidence was produced. The duty of the Third Member is only to appreciate the orders passed by the respective Members to find out as to which order is more reasonable and the Third Member cannot reappraise the matter in any other manner. AO has discretion to either reject the books of account and estimate gross profit or to consider the books and may make specific additions by considering as to whether the expenditure claimed is reasonable or not. The AO having chosen the second option, the Appellate Tribunal cannot substitute its opinion to that of the AO, unless it is pointed out that in the process of adopting the option he had arbitrarily made the additions which have no rational basis. Separate disallowance of expenditure is permissible, by taking into consideration the reasonableness of the claim under various heads such as purchase, labour charges, etc. Addition sustained by the Id. CIT(A) under various Acts confirmed - Decided against the assessee.
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