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2018 (10) TMI 587 - AT - Income TaxEstimation of income - N.P. determination - adopting net profit rate at 3.5% of the turnover after upholding rejection of book result under section 145(3) - AO has estimated at the rate of 5% whereas ld.CIT(A) has substantially reduced the rate to 3.5% - Held that:- Estimation of income would always involve guess work. To our mind 2nd appellate authority ought not to disturb the discretion exercised by the ld.CIT(A) simply for the reason that some minor variation on account of results shown by the assessee in earlier and subsequent year is possible to be made. The basic reason for this is that, the AO has an occasion to visualize about status of the assessee on the basis of his personal knowledge. The kind of inquiry made for rejecting the book results must have lead to harbouring a belief that some higher element of income is involved in the case of the assessee. This has been re-appreciated by the ld.CIT(A). Formation of such estimated opinion ought not to be disturbed by the second appellate authority unless something very serious flaws are being pointed out or it has been established that such belief was formed by the ld.CIT(A) on some extraneous decision. No such situation has been brought to our notice, and hence, we do not wish to interfere in the discretion of the ld.CIT(A) on the estimated rate of profit required to be applied while computing the income of the assessee - Decided against assessee
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