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2018 (10) TMI 1637 - AT - Income TaxRejection of books of accounts - estimations of the Gross Profit @ 9% - assessee did not provide to the AO. the details of consumption of raw material (seeds) vis-ŕ-vis yields, separately in respect of different types oils (cotton, mustard and ground nut, etc.) extracted from different seeds, when there is huge variation in the market price of these oils - Held that:- Consistent with the view taken by the co-ordinate bench in assessee's own case for AY 2011-12, we are of the considered view that the AO was erred in rejection of books of account u/s 145(3) without recording any reasons as to how books of account maintained by the assessee are inconsistent with regular method of accounting fattened and accounting standards. In absence of any finding as to incorrectness in books of account or stock details, merely for the reason that there is fall in gross profit ratio, the books of account cannot be rejected u/s 145(3), more particularly, when the assessee has reconciled difference in gross profit ratio with necessary evidences. AO was erred in estimating gross profit on total sales to make additions. Although the CIT(A) has accepted the contentions put-forth by the assessee to delete addition made by the AO towards estimation of gross profit, yet, he has sustained adhoc disallowance of ₹ 1 crore by following his predecessor’s order. But fact remains that the addition sustained by CIT(A) was deleted by ITAT, on further appeal by the assessee. Accordingly, we set aside the order of CIT(A) in confirming the adhoc addition of ₹ 1 crore and direct the AO to delete addition made towards estimation of gross profit in total. - Decided in favour of assessee.
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