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2021 (3) TMI 344 - AT - Income TaxEstimation of income - assessee’s books of accounts is not verifiable - HELD THAT:- Assessee is not maintaining books of accounts, as such, the income of the assessee was estimated by A.O. by invoking the provisions of section 44AF of the Act @ 10% of the total turnover as income of the assessee. The assessee has adopted the net profit rate at 4.08% to 7.91% from one year to another. There is high volatility in adopting the rate of profit by the assessee. In our opinion, to meet the ends of justice, it is appropriate to estimate the income of the assessee at 8% of the gross turnover instead of 10% adopted by the A.O. Addition u/s 69C/68 - contention of the A.R. is that once the income of the assessee estimated by applying the section 44AF of the Act, there cannot be any further addition for any lapse in the books of accounts - HELD THAT:- In the present case, the plea of the assessee that payment towards various cards like Citi Bank Card, ICICI Card, American Express card out of earlier withdrawals used for the business purpose and same was redeposited towards credit card payments and there should be due credit to be given. In our opinion, where the credit card withdrawals on earlier occasion from various credit cards was used for business purpose are to be established by the assessee by filing necessary evidence and establishing that assessee has used the credit card withdrawals for business purpose and thereafter it has withdrawn the money from the business to clear credit card dues. Accordingly, we remit this issue for the purpose of establishing the nexus between credit card withdrawals and by using it for business purposes and repay the card dues out of business receipts. In the present case, the A.O. not accepted the turnover declared with assessee and he considered the turnover on the basis of VAT return, which is evident from the table reproduced in para 6 of this order. Accordingly, we are not considered the above judgement in the case of Delux Roadlines Pvt. Ltd. [2014 (10) TMI 855 - KARNATAKA HIGH COURT] Further, assessee’s counsel relied on the judgement of Indwell Constructions [1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] for the proposition that where the books of accounts have been rejected, revenue cannot rely on the same books for additions of an exact item in the profit & loss account. In the present case, the facts are entirely different. The assessee is not maintained any books of accounts and the income of the assessee was estimated on the basis of turnover declared in the VAT returns. Thereafter, A.O. considered the bank statements and credit card statements to make addition u/s 68/69C of the Act. Being so, the judgement relied by the assessee’s counsel in the case of Indwell Constructions have no application. Appeals of the assessee are partly allowed.
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