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2007 (11) TMI 300 - HC - Income TaxRejection of books of accounts – best judgment assessment - assessee was a firm of labour contractors doing loading and unloading work of gunny bags from mandi to godowns and from the godowns to Railway Station and vice versa. The assessee received payment of Rs.25,40,127/- from the FCI for the assessment year 1983-84 and made payments on account of freight to the Truck Operators’ Union amounting to Rs.11,45,650/- by cheque and Rs.8,66,130/- in cash. The ITO after examining the evidence produced by the assessee rejected the books of account. The Assessing Officer applied the rate of profit at 8% on gross receipts – held that - looking to the normal net profit rate which is applicable to the case of civil construction contracts, the effective rate of profit on gross receipts would work out to less than 1% which would be extremely low and not practical. Moreover, once books of account are rejected then no separate deduction on account of freight charges as claimed by the assessee can be allowed – rejection of books of account upheld
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