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2016 (6) TMI 892 - AT - Income TaxRejection of books of accounts - N.P. adoption - Held that:- The Assessing Officer has rightly rejected the books of account, since various discrepancies have been pointed out in the books of account maintained by the assessee. As rightly pointed out by the CIT (Appeals), the rejection of books of account was not solely for the reason that the stock register was not maintained. The Assessing Officer has elaborated upon inflation of expenses on account of lack of vouchers, etc. The Assessing Officer had also pointed out that commission payments were about five times more compared to the commission paid in the last year. It was stated by the Assessing Officer, that the commission payments are excessive, when sale turnover was less than the previous year. Thus Assessing Officer has correctly rejected the books of account of the assessee. As regards the estimation of income CIT (Appeals)'s finding that the assessee is dealing in retail trade of pharmaceutical is erroneous. Section 44AF of the Act prescribes presumptive rate of taxation for retail traders. In this case, the assessee being in the business of wholesale trading, adopting the same rate that is prescribed under section 44AF of the Act, is not justified, since the net margin in wholesale trade is much less than in the retail trade. Moreover, taking into account the assessee's case, we find that due to the losses, the business of the assessee had closed down in the succeeding assessment year. Therefore, the rate adopted by the CIT (Appeals) at 5% of the net profit is excessive in the facts and circumstances of the case. In the interest of justice and equity, Net profit rate of 3% of the total turnover would suffice. - Decided partly in favour of assessee
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