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2014 (1) TMI 1925 - AT - Income TaxRejection of books of accounts - estimation of profit - HELD THAT:- AO computed the suppressed turnover, which is not disputed by the assessee. This is also an undisputed fact that the assessee has not filed any return u/s 139(1) in each of the assessment years, neither any return was filed in response to notice issued u/s 153A. Assessee even did not produce the books of accounts before the AO. Under these provisions, the AO, in our opinion, does not have any alternative except to reject the books u/s 145(3) and compute the income in the manner laid down u/s 144. AO has estimated the net profit, after deducting all the expenditure including the depreciation and estimated the profit on the basis of the profit for the assessment year 2009-10 and 2010-11 at 35%. We also find force in the submissions of the ld. AR that in the initial year, the percentage of the profit cannot be higher and there cannot be any thumb rule that a particular enterprise will earn the profit at a particular rate - assessee might have earned more profit but in the initial year, there are number of teething problems. The assessee takes time to establish and with a name in the market. Therefore profit has to be estimated. In view of this fact, in our opinion, this will meet the canons of justice to both the parties, if profit for the assessment year is estimated @10%, for the assessment year 2005-06 @12.5%, for the assessment year 2006-07 @15%, for the assessment year 2007-08 @20% and for the assessment year 2008-09 @25%. Addition of the other income - As we noted that since the AO has estimated the profit on the basis of the profit percentage and based on the assessment year 2009-10 and 2010-11. While working out the percentage of the profit during the assessment year 2009-10 and 2010-11, we noted that the AO has included the miscellaneous income in the profit earned. In view of this, in our opinion, no separate addition is required in respect of other income. Thus, ground no.1 in each of the assessment year is partly allowed while ground no.2 in each of the assessment year is fully allowed. Depreciation on fixed assets as deduction from estimated profit - HELD THAT:- As noted that since the AO has estimated the profit on the basis of the profit percentage and based on the assessment year 2009-10 and 2010-11. While working out the percentage of the profit during the assessment year 2009-10 and 2010-11, we noted that the AO has included the miscellaneous income in the profit earned. Therefore, in view of this, in our opinion, no separate addition is required in respect of other income.
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