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2020 (8) TMI 197 - AT - Income TaxEstimation of income - Bogus purchases - Rejection of books of accounts - estimation of net profit made by the AO at 40% - CIT-A restricted addition by taking average estimated net profit at 7% - HELD THAT:- In terms of documentation, assessee might have fullfilled all necessary ingredients, but still it failed to bring any evidence apart from these peripheral documents to demonstrate actual work done by the “LPPL” or capacity of “LPPL” to carry out such work. Though we could have recommended for carrying out a fresh investigation in order to prove whether the assessee got this work done actually from the sub-contractor or from some third person, but considering the fact that the actual contract has been completed to the satisfaction of the contractee i.e. ONGC in the present transaction routed through “LPPL” assessee might have earned a little more profit than actually shown by it in its books of accounts in earlier years or this year. Therefore, we do not find any error in the finding of the ld.CIT(A) for rejection of the books of accounts as well as estimation of profit at 7% on the total turnover. No justification at the end of the AO to estimate profit at 40% of the turnover, which is merely based on some illogical consideration of facts and figures. AO has not provided any material for estimation that profit must have been earned at 40%. Therefore, considering the above facts and circumstances, we do not find any merit in both the appeals of the parties.
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