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2019 (4) TMI 47 - AT - Income TaxGP Estimation - G.P. rate determination - AO rejected the books of account on the plea that the stock records are not maintained and in respect of some of the suppliers notices issued u/s 133(6) was returned unserved - HELD THAT:- Mere rejection of books of account will not entitle the AO to make the trading addition unless the trading results offered by the assessee during the year under consideration are not comparative as compared to the earlier years. Even after rejection of books of account, addition can be made only on the basis of material on record. In the instant case, we found that during the year under consideration, the assessee had shown G.P. rate of 5.35% on a turnover of ₹ 51.86 crores for the year under consideration as against the G.P. of 5.26% on turnover of ₹ 45.65 crores in the A.Y. 2013-14 and 3.18% on a turnover of ₹ 33.16 crores in the A.Y. 2012-13. A trading result even after substantial increase in sale is much better than the G.P. rate of earlier two years. Accordingly, no justification for the trading addition so made by the AO. Ad hoc disallowances in respect of telephone, travelling and vehicle expenses etc. - HELD THAT:- Ad hoc basis by observing that a personal element cannot be ruled out. In this regard we observe that the assessee being a corporate entity, no disallowance can be made on the ground of personal use in view in the case of Sayaji Iron & Engg. Co. vs. Commissioner of Income-tax [2001 (7) TMI 70 - GUJARAT HIGH COURT]. Accordingly, we direct the Assessing Officer to delete the ad hoc disallowance of expenses of ₹ 45,088/-.
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