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2018 (3) TMI 381 - AT - Income TaxRejection of the books of accounts - estimation of the profit at the rate of 8% of the gross profit - Held that:- Assessee has merely made certain submissions despite specific request by the Ld. assessing officer to produce the books of accounts on several occasions. The assessee has not come out with the clean hands by producing the books of accounts. Therefore, it is clear from the records that assessee did not wish to produce the books of accounts. According to us, if the books of accounts are not produced, there is no option left with Ao other than to estimate the net profit of the business of the assessee. Therefore no fault can be found with the Ld. assessing officer in applying the provisions of section 145 (3). Decisions relied up on by the assessee are perused and it is found that in all those years the assessee produced the books of accounts and AO verified it. However in the facts in this case are startling that assessee has not produced the books of accounts at all. Estimation of the net profit of the business - benchmarking of the net profit for the current year cannot be made in comparison with those years. The net profit at the rate of 8% is also too high in case of the business of the civil construction for this year compared to the assessment history of other years of the assessee. No reasons have been given by the assessing officer for estimating the net profit at the rate of 8%. No comparative instances have also been cited. Further even in section 44AD for the small business where the turnover is less tha 60 lakhs rate of profit is 8 %. In the present case the assessee has turnover of more than 9 croes therefore such a high rates cannot be applied to the business of the assessee. No injustice would be caused if the net profit of the assessee were estimated at the rate of 5% of the gross receipt of the assessee. AO is directed to estimate the net profit of the assessee at the rate of 5% instead of 8%. - Decided partly in favour of assessee partly.
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