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2017 (12) TMI 994 - AT - Income TaxRejection of books of accounts u/s.145(3) - G.P. rate determination - Held that:- AO has not brought any material on record suggesting that the assessee was involved in selling liquor and not recording the same. Since, the purchase and sales are to be notified to State Excise Department as well, the AO has not brought any material suggesting that the State Excise Department has adversely reported about the sale and purchase. Under these undisputed facts, we are of the view that the Assessing Officer was not justified in rejecting the books of accounts. Further, even it is assumed that the books of accounts were not giving true picture of profit. The AO u/s 144 of the Act is under statutory duty to find out the profit declared by comparing with the similarly situated persons, if such information is not available in that event the Assessing Officer is required to deduce profit on the basis of average of last five years GP which is not done in this case. Hence, the action of the Assessing Officer rejecting the books of accounts is not justified. We therefore, direct the Assessing Officer to adopt gross profit @ 17.40% as declared by the assessee, as in this year there is an increase in sales. Ground no. 1 and 2 of the assessee’s appeal are allowed. Addition u/s 69A - Held that:- AO made addition on the basis that no confirmation by Shri O.P. Gupta. It is seem that the assessee has filed a copy of Power of Attorney given by Shri O.P. Gupta in favour of the assessee. The assessee has also filed bank’s statements reflecting the debit entry about the money re-paid to Shri O.P. Gupta. It is also noticed that the Assessing Officer has not issued any summon to Shri O.P. Gupta for the purpose of verification the correctness of claim of assessee. In the absence of proper enquiry by the Assessing Officer, in our view, the addition is unjustified. Therefore, after considering the totality of the fact we deem it appropriate to set aside this issue to the file of the Assessing Officer for the purpose of verification afresh. Therefore, these grounds are allowed for statistical purpose. Addition invoking the provisions of section 69A - amount taken by the assessee from his wife - Held that:- It is demonstrated by the assessee that this transaction is duly reflected in the books of accounts. The assessee has also filed income tax return of Smt. Sunita Devi. Therefore, we are of the view that authorities below were not justified in making the addition. The AO is directed to delete the addition. Thus, Ground no. 6 is allowed. Addition u/s. 68 as unexplained credits - Held that:- We find that the assessee has not furnished any supporting evidences. Therefore, these grounds of the assessee’s appeal are dismissed. disallowance @ 10% of expenses incurred on conveyance, business promotion and staff welfare on the ground of personal use - Held that:- As seen that the assessing Officer has made disallowance on the basis of surmises. Since, the disallowance is made on the basis of conjecture and surmises without basing the disallowance on material evidence. Therefore, we direct the AO to delete the addition.
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