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2017 (2) TMI 1526 - AT - Income TaxRejection of books of accounts - NP Profit estimation - A.O. estimated net profit of 7% on gross receipts net of all deductions including depreciation - HELD THAT:- Though, the assessee has maintained katcha books of accounts, which does not give true and correct profit of the business as the assessee has not accounted certain receipts from return trips. A.O. opined that trading result disclosed by the assessee are not amenable for verification going by the fact that the assessee did not produce regular books of accounts duly supported by documentary evidence such as bills/vouchers for different items of expenditure such as diesel, driver betas, loading & unloading charges and particularly other expenses which contributes major part of the total expenditure for the assessment year under review. A.O. further influenced from the statement of the managing partner deposed an oath at the time of recording sworn deposition dated 5.2.2010 to the effect that the freight receipts others than Raasi Cements are not reflected in the books of accounts. Therefore, we are of the view that the A.O. was right in rejection of books of accounts and estimation of net profit. NP estimation - We find that the coordinate bench of this Tribunal in the case of ITO Vs. Sri Gundapaneni Nageswara Rao [2014 (5) TMI 344 - ITAT HYDERABAD] under similar set of facts, has directed the A.O. to estimate net profit of 3% net of all deductions including depreciation. Though, there are divergent views from the appellate authorities, the view which is more beneficial to the assessee has to be adopted in view of the Supreme Court, decision in the case of CIT vs. Vegetable Products Limited [1973 (1) TMI 1 - SUPREME COURT] Therefore, we are of the considered view that since, the assessee has not proved the ownership of assets to claim the depreciation we deem it appropriate to direct the A.O. to estimate net profit of 3% on gross receipts net of all deductions including depreciation. Accordingly, we direct the A.O. to estimate net profit of 3% on gross contract receipts net of all deductions for all the assessment years 2006-07 to 2009-10. Revenue appeal is partly allowed.
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