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2015 (4) TMI 470 - AT - Income TaxRejection of books of accounts - Estimation of income - Held that:- Assessee did not produce proper books of account and other relevant details in support of the expenses, etc., claimed. The same position continued even before the learned first appellate authority inasmuch as the assessee admitted that it was not possible to do so because of the closure of its business and the case being before BIFR - rejection of books of account by the authorities below is upheld. Determination of the gross profit rate to be applied after rejecting the books of account - AO applied GP rate of preceding year. However, it can be seen from the impugned order that the assessee was in BIFR being a sick company declared so vide order dated 21.12.2006, being the period relevant to the assessment year under consideration. The fact that the assessee was declared as a sick company in this year alone strengthens the view point of the ld. CIT(A) for justifying the departure from the preceding year’s gross profit rate. If there had not been this salient feature in this year, we would have gone by the earlier year’s gross profit rate. But this is a relevant factor justifying the reduction in profit. In our considered opinion, the ld. CIT(A) was justified in ordering the application of 4% GP rate in contrast to 7.18% applied by the AO Auditor of the assessee pointed out the referred irregularities in the payment of statutory liabilities, which called for disallowance, if any, under section 43B or the other relevant provisions of Chapter XVII-B of the Act. Merely because the AO mentioned a wrong section in making the disallowance cannot be a ground to delete the addition, if the facts otherwise justify the sustenance of addition under some other appropriate section. As the ld. CIT(A) has failed to consider the merits of addition made by the AO for a sum of ₹ 14.56 lac, we cannot sustain his point of view. - Matter remanded back - Decided partly in favour of Revenue.
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