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2022 (7) TMI 270 - ITAT CHENNAIGP estimation - incorrectness of books of accounts maintained by the assessee - whether CIT-A erred confirming Gross profit margin at a high rate calculated on the basis of subsequent year's figures - HELD THAT:- We are of the considered view that under these facts and circumstances, a reasonable estimation towards gross profit taking into account, the nature of business carried out by the assessee and risk involved in the said business is only a solution. Hence, the profit margin estimated by the AO is higher side and thus, direct the AO to estimate gross profit of 8% on total sales declared by the assessee for both the assessment years. Estimation of administrative expenses - AO has rejected books of accounts and estimated administrative expenses for whole year at Rs.30 lakhs which includes, remuneration, salaries and wages, depreciation, etc. - As taking into account, the nature of business of the assessee and also the reasons given by the AO to estimate administrative expenses, we are of the considered view that both have failed to justify their case with necessary reasons and thus, we direct the AO to allow 90% of total expenses claimed by the assessee in their financial statement filed for the relevant assessment year and recompute profit from the business taking into account gross profit @8% on total sales and allow 90% of expenses as claimed by the assessee.
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