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2016 (1) TMI 242 - AT - Income TaxEstimation of income done by AO at 1% of the turnover - CIT(A) cancelled the estimation - Held that:- The opinion that CIT(A) is correct in setting aside the estimation of income. Even though certain mistakes are pointed out by the AO, in our opinion, they are not good enough to reject the Books of Accounts. In fact as contested by assessee, many of them are considered on wrong perceptions. AO was of the opinion that the stock purchased with cartel group are entered in the stock register, whereas it was found that they were not entered in the stock register and what assessee has accounted was only its share of purchases through the cartel. There are explanations given by assessee for separate entries in different ink and how assessee has suffered losses in its manufacturing activity. With reference to purchase of goods also, since none of the transactions are there with any associate or group companies or firms, as rightly pointed out by the CIT(A) the profits earned by the third parties should not be basis for disallowing cost of purchase in assessee’s hands. Be that as it may, since assessee’s books of accounts are maintained and audited and most of the additions are made on the basis of books of accounts other than this estimation of income, we are of the opinion that Revenue has not made out proper case for rejection of books of accounts and estimating the income at 1%. Even the Revenue in Ground No. 4 accepts that percentage of estimation of income defers from year to year depending on the circumstances of the case. This also indicates that assessee’s business profits or losses also fluctuate on year to year basis. There is no need to reject the Books of Accounts which are maintained and on which defects are not pointed out so as to reject them. In view of this, we uphold the order of CIT(A) - Decided against revenue
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