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2014 (7) TMI 376 - AT - Income TaxPurchases made outside the books – Held that:- AO has estimated the negative stock, by first assuming a particular percentage as gross profit - The calculation adopted by the AO is to first add purchases to the opening stock and thereafter estimate a particular percentage of the sales/turnover as gross profit - The balance figure is taken as closing stock - closing stock cannot be estimated by assuming a particular Gross Profit Percentage when the books of accounts are not rejected – Relying upon Income Tax Officer Versus Shri Anand Prakash Gupta, Prop. of M/s Anand Prakash Ankit [2013 (5) TMI 578 - ITAT DELHI] - assessee had maintained proper books of accounts, no defect had been pointed out in books of accounts, quantitative details of stock were duly certified by auditors – thus, the order of the FAA is upheld – Decided against Revenue. Ad-hoc disallowance – Held that:- FAA was of the view that the assessee has explained in detail that the employees are villagers doing hand jobs who come from far flung areas and then go back to their villages or some other business concerns - Salary register has been maintained and primary details are available regarding the employees to whom salary was paid - there are also certain flaws in the assessee’s explanation which cannot be brushed aside - on salary register, signatures of the employees have not been taken - some amount of disallowance is justified – revenue was not able to contradict the findings of the CIT(Appeals) – Decided against Revenue.
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