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2016 (4) TMI 658 - AT - Income TaxEstimation of income - G.P. rate determination - basis of which the AO has rejected the books of account was on account of the assessee’s failure to produce the confirmations of the accounts from the purchasers of the goods from the assessee - Held that:- Rejection of books of account by the AO was without any rhyme and reason or the justification. In our view, once the assessee was maintaining books of account, purchases and sales were duly vouched, there was sufficient compliance in maintaining the records and there was no justification on the part of the AO to reject the books of account. Decided in favour of the assessee and against the revenue. Since we have held that the books of accounts were duly maintained by the assessee and no specific defect has been pointed out by the AO, therefore, in our view, the AO has no reason to estimate the income of the assessee by applying the GP rate of 8.54%. The authorities below have failed to bring on record the basis of arriving at the GP rate of 8.54% which is contrary to the GP shown by the assessee to the extent of 4.99%. Since we have held that the books of accounts were duly maintained by the assessee, therefore, the estimation brought on record by the AO and confirmed by ld. CIT (A) is without any basis. Accordingly the addition made by the authorities below is hereby directed to be deleted. As books of accounts were duly maintained by the assessee and all the sales and purchases are duly vouched and maintained by it, therefore, we do not find any justification for disallowing 5% of the expenses towards Conveyance, Deepawali, General, Telephone, Transport and Car. Accordingly the disallowance made by the authorities below on these heads is also directed to be deleted.- Decided in favour of assessee
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