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2017 (5) TMI 1806 - AT - Income TaxRejection of books of account u/s 145(3) - estimation of net profit - AO applied the GP rate of 4.1 per cent being average GP rate of assessee's three office's GP to the total freight receipts (excluding own trucks) - HELD THAT:- AO has pointed out some defects mainly that the assessee has not submitted the name and addressed of the owner of the trucks and their PAN which in fact could have been submitted and are part of the record. Assessee has submitted the truck number and their registration number as well. All the details of the expenses have been submitted is a matter of record. Books of account are maintained in which no defect as such has been pointed out except as above. The details of the driver salary, Bhatta expenses though were on the self made vouchers, but all the details were submitted before both the parties below and the amount paid to the recipient was also submitted. In the circumstances and facts of the case, the AO was not justified in invoking the provision of s. 145(3) of the Act and accordingly the order of the learned CIT(A) is reversed. Estimation of income - Once books of account are not found to be rejected, no estimation of the net profit can be made. However, during the impugned year the assessee has declared a net profit @ 0.58 per cent as compared to the preceding year @ 0.34 per cent and @ 0.29 per cent in the year before the preceding year. It is the assessee had declared the better results and it is a settled law that even the books of account are rejected no addition can be made on such account - no additions can be made to the income of the assessee and additions so sustained is directed to be deleted. Accordingly, grounds of the assessee on the issues are allowed. Treatment of the income u/s 44AE of the Act of the trucks owned by assessee - Assessee has maintained the separate books of account and therefore the provisions of s. 44AE cannot be made applicable, therefore, the addition so made is directed to be deleted. Hence, all the grounds of the assessee are allowed.
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