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2014 (1) TMI 1266 - AT - Income TaxRejection of books of accounts – Estimation of income 8% on gross receipts – Held that:- In case of certain expenses the bills and vouchers were not produced at all while in case of a large number of expenses only self made vouchers were produced - The assessee was also asked to submit complete addresses and PAN of the trade creditors - Since the expenses claimed by the assessee are not fully verifiable, the correctness of the books of account of the assessee was not satisfied – thus, the lower authorities are justified in rejecting the books of account of the assessee. Wherever the gross contract receipts exceed Rs. 40 lakhs the provisions of section 44AD are not applicable - Therefore, the profit can be estimated either at lower than 8% or above 8% depending upon the factual situation - for the purpose of estimating the profit various factors such as the profit ratio of the assessee in the earlier year, profit ratio of the similarly placed traders in the same locality, demand for the product, availability of labourers, raw materials, etc., and the time gap available for executing the contract work, etc., have to be taken into consideration – thus, reference to earlier order of this Tribunal for the purpose of estimating the profit is justified - Income of the assessee has to be estimated at 8% on main contract and 5% on subcontract receipts – thus, the Assessing Officer is directed to estimate the income of the assessee at 8% on main contract receipts and at 5% on subcontract receipts. Addition made u/s 68 of the Act – Unexplained credits – Held that:- It is for the assessee to provide the explanation for cash credits, when the assessee has not pleaded that the cash credits came out of the past intangible additions, it would not be open to the Tribunal to hold that the cash credits would be covered by such additions – Relying upon CIT vs. G. M. Chennabasappa [1958 (9) TMI 78 - ANDHRA PRADESH HIGH COURT] - The omission to claim set off of past intangible additions against cash credits would give rise to a presumption that the former amounts were not available for set off - When the alternate plea that tangible additions in the past could take care of cash credits of current year is not taken at the earlier stage and no materials are placed on record to substantiate the same, rejection of such plea would be justified - The availability of funds representing the intangible additions should be quantified not with reference to what the assessee offered for taxation but what was actually adopted in assessments for taxation - the assessee failed to show how the addition u/s 68 is related to estimated income - the assessee's contention on telescoping on addition towards unexplained credit on the addition made towards business income is rejected and the addition made u/s. 68 is sustained in its entirety – Decided partly in favour of Assessee.
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