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2023 (7) TMI 8 - ITAT PUNEBest judgment assessment order u/s 144 - books of accounts rejected - estimating the net profit of the assessee at 10% of the total turnover by CIT(A) - HELD THAT:- Once the books of accounts have been rejected by the CIT(A) u/s 145(3) stating that the contents therein are not reliable and thereafter, he had arrived at the net profit of the assessee at 10% then in such scenario such estimation of net profit shall cover all other expenses and additions whatsoever. Meaning thereby, once the income is arrived at on percentage of net profit while rejecting the books of accounts, then such estimation of income is conclusive of all other expenses in the case of the assessee and after such estimation of income rejecting the books of accounts there is no scope for any further addition for any other expenses. Directly on the point of estimation of net profit the Hon’ble Madhya Pradesh High Court in the case of CIT Vs. Purshottamlal Tamrakar Uchehra [2003 (3) TMI 10 - MADHYA PRADESH HIGH COURT] has held that once the net profit is applied while determining the income of the assessee then section 40A(3) of the Act is not applicable. Reverting to the facts of the present case, when the ld. CIT(A) has rejected the books of accounts u/s 145(3) of the Act and had arrived at net profit at 10% that would cover all expenses and disallowances and therefore, the contention of the department that certain expenses have been allowed without verifying, the issue now becomes irrelevant and immaterial. No infirmity with the findings of the d. CIT(A) which is therefore, upheld. This part of the ground in revenue’s appeal is dismissed. CIT(A)'s order where he had directed the A.O to examine the expenses claimed and genuineness of the creditors and the profit shown by the assessee for A.Y. 2014-15 - We hold that the relevant year before us is A.Y. 2013-14 and not A.Y. 2014-15. Therefore, the determination on the issue pertaining to the taxation for A.Y. 2014-15 in the case of the assessee is not the subject matter of adjudication for the relevant assessment year 2013-14 and hence this part of the findings in the CIT(A)’s order is set aside as premature and infructuous. We order accordingly. This part of the revenue’s contention is accepted and allowed. Appeal of the Revenue stands partly allowed.
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