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2023 (6) TMI 36 - AT - Income TaxRejection of books of accounts - Assessment of income u/s 144 - HELD THAT:- AO having rejected the books of accounts of the assessee firm under sub-section (3) of Sec. 145 thereafter, could not have relied upon the said books of accounts, and the proper recourse available with him was to judicially determine its business profits in the manner provided in Sec. 144 of the Act. Our view that once the books of account of an assessee are rejected as unreliable then it is open to the A.O to estimate the assessee’s profits considering the profit which was earned in similar business by other similarly placed merchants is supported by the judgment of CIT Vs. K.Y Pilliah & Sons [1966 (10) TMI 35 - SUPREME COURT] AO after rejecting the books of accounts of the assessee could not have based his assessment on the said books of accounts and should have judicially determined the business profits in the manner provided in Sec. 144 of the Act. Thus though approve the rejection of the books of accounts of the assessee firm u/s 145(3) by the A.O, but direct him to determine its business profits in the alike manner as was adopted by him while framing the respective assessments u/ss. 143(3)/147 in the case of the assessee firm for the preceding years, i.e A.Y 2010-11 to A.Y 2013-14, i.e @ 8% of its for the year under consideration. Addition u/s 68 and 69C - The maintainability of the additions made by the A.O u/s 68 and u/s 69C would not be telescoped in the business profits of the assessee firm and are required to be considered separately. Addition u/s 68 - As the ld. A.R had neither come forth with any explanation to rebut the observations of the lower authorities nor led any material which would prove otherwise, therefore, we are constrained to sustain the addition made by the A.O u/s 68 of the Act. Addition u/s 69C - debit entry against the name of Partner which was apparently spent towards purchase of a gold biscuit, but the same was not found recorded in the regular books of accounts of the assessee - claim of the assessee that the same pertained to the Vishwakarma expenses that were incurred by its partners. The A.O observing that the aforesaid expenditure was not record in the books of account of the assessee firm thus made an addition of the same u/s 69C - CIT(Appeals) being of the view that the pooja expenses were not allowable as a deduction u/s 37 disallowed the same - HELD THAT:- Ostensibly, the aforesaid expenditure of Rs. 1.60 lac is not recorded in the regular books of accounts of the assessee firm. Considering the aforesaid facts, we are of the considered view that the A.O had rightly made an addition u/s 69C of the Act. Once the A.O had made an addition of the aforesaid expenditure of Rs. 1.60 lac as an unexplained expenditure u/s 69C of the Act, then there was no occasion for the CIT(Appeals) to have looked into its allowability as a deduction u/s 37 of the Act. We, thus, finding no infirmity in the addition of Rs. 1.60 lac made by the A.O u/s 69C of the Act, uphold the same.
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