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2018 (9) TMI 864 - AT - Income TaxEstimation of income of the assessee by applying a fair and reasonable net profit rate - Estimation of income by applying net profit rate of 8% - Held that:- Estimation of profit is purely a question of fact meaning thereby that no particular rate of profit has universal application and depending upon the facts and circumstances of each case the rate of profit varies. It therefore implies past history of the assessee’s own case is the most relevant guide for estimation of profit. CIT(A) has also ignored the provisions of Sec. 145(3)/144 by not appreciating the trading results declared by the assessee in the earlier years and has confirmed the very high and unreasonable net profit rate of 8% on the gross total receipts which is without any basis by taking support of the provisions of sections 44AD which are not applicable in the present case because the turnover of the assessee is in several crores. Past history is the best guide to estimate profit where book profit is unbelievable, we derive authority from the Hon’ble Jurisdictional M.P High Court Judgement in the case of ‘VrajlalManilal & Co. Vs CIT’ [1972 (11) TMI 9 - MADHYA PRADESH HIGH COURT] “Section 145 of the Income-tax Act, 1961 Method of accounting - Estimation of profit - Assessment year 1957-58 - Whether previous orders of assessment, although they may even be best judgment assessments, would form good material or good evidence for purpose of computing income of assessment year in question - Held, yes.” The grievance of the assessee is accepted as justified. It is just fair and reasonable to estimate income of the assessee at the Net Profit rate of 5.0% as against 8% estimated by the authorities below. Accordingly, the ground is partly allowed.
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