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2016 (12) TMI 452 - AT - Income TaxNP determination - rejection of books of accounts - Held that:- It is not the case of the Assessing Officer that, the expenses claimed by the appellant are excessive or bogus. Thus, rejecting books only on the ground that the vouchers were unsigned, or the bills were hand written is unwarranted and bad in law, especially when the books are audited and no discrepancies have been pointed. CIT(A) has closely examined the assessee’s books of accounts and has come to a well-reasoned order that the same are not reliable and rightly held to be rejected under section 145(3) of the Act. As far as estimation of profits is concerned, it is noted that no basis has been given by the AO while estimating the N.P rate and making an addition of ₹ 12,00,000 and thereafter by the ld CIT(A) while reducing the N.P rate at 7.5% as against 6.60% declared by the assessee. Further, given the past history of the assessee, it is noted that it has disclosed N.P before depreciation at 10.75 % which is higher as compared to past two years. In light of above, we see no reason to interfere with the N.P rate declared by the assessee. Hence, the trading addition made on this account is deleted. Addition on account of service tax - AO made the addition invoked the provisions of section 43B given that the service tax has not been deposited before the due date of filing of return of income - Held that:- Undisputedly, the service tax has been collected by the assessee from its customers during the year and the same has not been paid before the due date of filing of return of income. The ratio of the Hon’ble Supreme Court decision in the case of Chowringhee Sales Bureau [1972 (10) TMI 4 - SUPREME Court] that the Sales tax collected and not deposited with the treasury would form part of the assessee’s trading receipt is clearly applicable to the facts of the case. In the instant case, the assessee has contended that it has followed the exclusive method of accounting where the service tax has not been routed through the profit/loss account. In our view, in light of decision in case of Chowringhee Sales Bureau, such contention will not hold good and irrespective of method of accounting followed by the assessee, service tax collected and not deposited will be considered as part of professional receipts. Thus we confirm the order of the ld CIT(A) who has rightly confirmed the disallowance of service tax collected by the appellant from its customers and didn’t deposit the same before the due date of filing of return of income. The appellant shall be at liberty to claim the same in the subsequent year of payment as per provisions of section 43B of the Act.
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