Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 762 - AT - Income TaxEstimation of net profit rate - Rejection of books of accounts - HELD THAT:- Merely holding the comparable company in similar line of business is only the first step in undertaking a benchmarking analysis. The analysis also needs to consider various other factors and take into consideration functions, risks, and assets employed which apparently has not been undertaken in the instant case and the assessee has also not been confronted with the same. In view of the same, we find that comparing the results of the assessee with an external comparable is not justifiable in the instant case. Results which are on declining scale are declared on reduced turnover over the past and subsequent years which have been accepted by the Revenue and thus lend credence to the assessee's submission that its profitability has been effected due to reduced turnover without commensurate reduction in fixed costs. No justifiable basis has been stated by the ld. CIT(A) while estimating the net profit rate at the rate of 15% which is again arbitrary and no linkage with any material or past history of the assessee. No justifiable basis to disturb the declared results by the assessee even where the books of accounts have been rejected and the addition so made by estimating the net profit rate at the rate of 40% and sustenance thereof by the ld. CIT(A) at 15% is hereby directed to be deleted. Ground of the assessee's appeal is allowed.
|