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2019 (9) TMI 1075 - AT - Income TaxRejection of books of accounts - NP determination - addition made by AO of net profit at 9% of total turnover - HELD THAT:- From the perusal of the audited financial statements of the assessee, we find that assessee was also in receipt of direct income and maintenance income respectively which were offered to tax as business income by the assessee and assessed as such by the ld. AO. These two figures were included as part of total turnover by the ld. AO while estimating the net profit of 9% thereon, but were sought to be excluded by the ld. CIT(A) as they were not derived from contract business. Assessee had maintained the consolidated financial statements for all his business activities carried out including the contract business and from which division wise transactions, turnover, purchases, expenses and its related profitability could be properly deduced there from. These details were also provided before the ld. AO and before the ld. CIT(A). CIT(A) had resorted to reject the books of accounts of the assessee only in respect of contract business and determined the net profit thereon at 9%. This is a classic case of rejection of books of accounts of the assessee partially by the ld. CIT(A). As already given our detailed observationsdisregarding the primary contentions of the ld. AO to reject the books of accounts we hold that this is not a fit case for rejection of books of accounts and book results u/s.145(3) of the Act and estimating the net profit of the assessee thereon. At the cost of repetition, we find that both the gross profit and net profit ratios had indeed increased during the year in contract business as well as in the overall business activities. Accordingly, we direct the ld. AO to delete the addition made towards estimation of net profit and accept the book results of the assessee in the facts of the instant case. Accordingly, the grounds raised by the assessee are allowed.
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