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2017 (3) TMI 662 - AT - Income TaxRejection of books of accounts - trading addition - Held that:- The gross profit rate of the assessee is better than preceding year and the turnover is also higher for the year under consideration. However, the assessee is not maintaining the proper books of account with regard to stock. Therefore, to plug the leakage of revenue, certain disallowance is inevitable as the opening stock, purchases & sales and closing stock of the assessee are not verifiable. Thus the lower authorities are justified in rejecting the books of account of the assessee by invoking the provisions of Section 145(3) of the Act but the addition sustained by the ld. CIT(A) to the extent of ₹ 2.00 lacs appears to be on higher side in the present facts and circumstances of the case and the same is sustained to the extent of ₹ 50,000/-. Thus the Ground of the assessee is partly allowed. Disallowance of expenditure - Held that:- When the books of account are rejected and trading addition are made, there is no justification in making further adhoc disallowance qua telephone and conveyance. This view is supported by ITAT in assessee's own case for preceding year. Thus we direct to delete the addition of ₹ 27,585/- (being 10% of the total claim) sustained by the ld. CIT(A). - Decided in favour of assessee
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