Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 515 - AT - Income TaxRejection of books of accounts - Estimation of income - HELD THAT:- We uphold the invoking the provisions of Section 145(3) of the Act, as neither the figures of sales reported by the AO in the audited books of accounts are reliable (because in the audited books of accounts, sales declared is of ₹ 9,40,65,836/- and the sales declared in the VAT return is ₹ 9,60,65,836) nor the rate of GP declared by the assessee can be accepted as correct. The assessee had declared gross profit rate of 2.84% in the immediately preceding assessment year and rate of gross profit of 3.24% in the immediately subsequent assessment year. The case laws relied upon by the ld. AR are not applicable as per facts of the present case, therefore, considering the totality of facts and circumstances, we found that the ld. CIT(A) has passed a speaking and reasoned order discussing all the details of the case of the assessee, as far as the rejection of books of account, thus we uphold the order of ld. CIT(A) to the extent it has upheld the rejection of books of account of the assessee. Considering the GP rate of 4% on the estimated turnover - It is important to mention here that the assessee’s turnover jumped by 141% at ₹ 9.40 Crores this year from 6.64 Crores last year. We are of the view that to achieve such abnormal increase in the turnover, one has to compromise on its margins and such a fact certainly deserved consideration as far as the matter of fair estimation is concerned. While reaching to this conclusion, we also draw strength from the decision of CIT v/s Amrapali Jewels (P) Ltd. [2011 (10) TMI 470 - RAJASTHAN HIGH COURT] - At the same time, we cannot lose sight of the fact that the GP declared even at 1.61% on the turnover of ₹ 11.12 Cr. in assessee’s own case in AY 2012-13 was also accepted by the Revenue. Thus, we restrict the addition to the tune of ₹ 10.00 lacs and remaining additions are directed to be deleted. Hence, grounds No. 1 to 1.2 of the Revenue’s appeal and grounds No. 1 to 5 of the assessee’s C.O. are partly allowed. Addition of various expenses - HELD THAT:- Assessee has maintained complete Books of account and other subsidiary record and all the expenses are fully supported by vouchers. A bare reading of the order of lower authority shall reveal that in almost all the cases the disallowances have been made on ad hoc basis, simply on mere suspicion, surmises and conjectures. No specific instance of any nature whatsoever has been given by the AO in the impugned order to support his contention with the documentary evidence that the expenditures were incurred for non-business purposes, element of personal user was there. An allegation remains a mere allegation unless proved. Freight, Telephone expenses, Petrol & Diesel Expenses and Vehicle Expenses were dully supported by Bills and vouchers etc. In these expenses there was no possibility of personal user. It is a settled law that a businessman is the best judge to take care of its own interest & to take decisions and the AO is not supposed to intervene therein nor he can replace the assessee. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. Disallowance of depreciation on vehicles is also not warranted with the facts and merits of the case as depreciation being a statutory allowance and hence cannot be restricted on the basis of personal use - Thus we direct to delete the additions confirmed by the ld. CIT(A) with regard to various expenses.- Decided in favour of assessee.
|