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2010 (4) TMI 111 - HC - Income TaxArranging inland tour of foreign tourists visiting India – Best Judgment Assessment after rejection of account books - The net profit shown in the return was at 7.93% of the receipts. Since the Assessing Officer felt that the net profit reported by the assessee was on lower side, he picked up the expenses relating to seven tours organized by the respondent. On a consideration of the accounts furnished by the assessee, the Assessing Officer felt that the assessee could not demonstrate any pattern as to uniformity of rates etc. and the expenses debited in the tour Ledger did not reconcile with the tour itinerary. He, therefore, rejected the book results in terms of Section 145(3) of the Income Tax Act, 1961 and assessed the income @ 12% of gross foreign receipts. Net rate of 10% was applied by the Assessing Officer, to determine the income from Indian business receipts. Held that: The question as to whether the accounts produced by the assessee were defective/incomplete or not is a question of fact – CIT(A) and ITAT have found that the accounts maintained by the respondent were neither defective nor incomplete - Even the Assessing Officer has not found any fault as such with the system of accounting being followed by the assessee - non-production of formal agreements with the foreign principals would not render the accounts of the assessee incomplete and would not give justification to the Assessing Officer to reject them under Section 145(3) of the Act.
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