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2016 (6) TMI 494 - AT - Income TaxAddition on difference in cash and bank balances as per statement of accounts prepared on estimate and ad hoc basis - Held that:- financial statement cannot be relied upon to assess the actual transaction of the assessee. In our view, the AO has to assess the actual income of the assessee. No doubt, the turnover of the assessee is less than the turnover prescribed for tax audit u/s 44AB. Assessee had opportunity to opt for assessment u/s 44AD. However, assessee chose to declare more than 8%, assessee may have better reason for declaring more than the limit prescribed u/s 44AD. Assessing Officer is of the opinion that the assessee had earned a specified income from the business of sale of scrap. In such an event, Assessing Officer may not be justified in blowing hot and cold and making a specified addition again based on the balance sheet prepared by the assessee, which was not accepted in totality by the Assessing Officer while estimating the income. At any rate, in the instant case, Assessing Officer having not specified any section/provision, the addition made by the Assessing Officer in our considered opinion is not sustainable. If a separate addition has to be made, the onus is upon the Assessing Officer to bring on record some evidences to justify that the assessee had actually earned undisclosed income over and above what was estimated from the business of sale of scrap and also to bring that there were additional sales which have generated income or there was other source of income. No such effort was made by the Assessing Officer in this case. Also the total income computed by the Assessing Officer including the impugned addition of ₹ 3,59,843 works out to ₹ 6,79,360/- and the percentage of profit vis-a-vis turnover estimated by the Assessing Officer works out to approximately 43%, which in our humble opinion, is absurd in the line of this business, not only because of the fact that the Assessing Officer himself estimated arbitrary profit rate of 20.22%, but, also having regard to the past record of the assessee where the assessee has declared the profit range between 15 to 18%, which was accepted by the Assessing Officer. Thus Assessing Officer is not made out a case for making a separate addition - Decided in favour of assessee
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