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2019 (11) TMI 1223 - ITAT JAIPURRejection of books of accounts u/s 145(3) - AO estimated the income of the assessee by applying NP rate at 4% of turnover as against NP declared by the assessee at 2.51% - HELD THAT:- The past history of the assessee which is accepted by the department is a proper guidance and reasonable basis for estimation of income of the assessee for the year under consideration. AO has applied 4% net profit without citing any basis or comparable instance. Therefore, ignoring the past history of the assessee and estimating the income based on NP at 4% without giving any basis as to how NP rate of 4% is reasonable and proper, the action of AO is contrary to the settled proposition of law. The power of estimation does not mean an arbitrary power with the AO but the estimation has to be on some reasonable and proper basis. CIT (A) though restricted the addition by applying 3.5% NP, however, there was no basis explained by the ld. CIT (A) for applying the NP at 3.5%. Thus it is clear that the assessee has declared a better result for the year under consideration in comparison to the result of the preceding years which were accepted by the department. Accordingly, in view of the above facts and circumstances of the case as discussed above, the addition sustained by the ld. CIT (A) is not justified and the same is deleted. - Appeal of the assessee is partly allowed.
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