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2021 (8) TMI 458 - AT - Income TaxEnlarging scope of limited scrutiny - rejecting the books of accounts of the assessee and estimating the income - CIT- A directed re-compute the net profit of the assessee at 8% in place of 6.54% as returned by the assessee - HELD THAT:- We do not agree with the contention of the Ld. Sr. D.R. on this issue for the reasons that if there is deficiency in vouchers or bills supporting the inference of the expense, this in our view cannot make accounts maintained by the assessee to be incorrect or incomplete. At the most, the expenses to the extent they are not supported by the vouchers can be regarded to be non-genuine and can be disallowed by the AO while computing the income of the assessee, but it cannot give the power to the AO to hold that the accounts are not correct or incomplete i.e. for the said reason only the AO cannot resort to reject the books of accounts of the assessee. FAA [Ld. CIT(A)] has ventured to do so (rejection of books of account) by assuming incorrect facts and misdirected himself by stating that the assessee has not produced the books of accounts before the AO/himself, whereas the AO has categorically observed that the assessee has produced cash books, ledgers and other documents called for by him. And in this context, it is noted that the Ld. CIT(A) has deleted the addition of ₹ 1.48 crores by relying on the veracity of the cash book submitted by the assessee before him. As findings of the Ld. CIT(A) on this issue shows non-application of mind and exposes per-se contradiction of facts. Therefore, the assumption drawn by the Ld. CIT(A) to re-compute the net profit of the assessee at 8% in place of 6.54% as returned by the assessee needs to be interfered with because it has no sanction of law and we set aside the same. Therefore the assessee succeeds. So, the direction of Ld. CIT(A) to re-compute the income of the assessee at 8% of the net profit of the gross receipt is canceled. - Decided in favour of assessee.
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