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2015 (6) TMI 845 - AT - Income TaxEstimation of income - rejection of books of accounts - income earned by the assessee by indulging in providing accommodation entries of purchase and sale of goods - CIT(A) has confirmed the assessment at 1% of the aggregate of the purchase and sales for the year - Held that:- The assessee has, apart from making bald statements, not advanced any material or set up any case to exhibit or show that the estimation at 1% of the aggregate of purchases and sales for the year is not reasonable or is excessive, which, for the foregoing reasons, we find it as not. We are conscious that the assessee has shown to have been allowed quality rebate by its supplier/s, effectively reducing the trading loss claimed by it. That, however, would have no bearing or impact in-as-much as the loss or its quantum is not in issue; the quality rebate being not a factor for VAT credit. Rather, the assessee stands to gain directly, i.e., to the extent of VAT credit, in case of ‘loss’ in-as-much as its stands to be allowed credit on its purchases, which are therefore higher than the sale value, on which VAT credit would stand to be passed on by it, and which also explains, or perhaps so, the reason for the unsubstantiated and unexplained trading loss being regularly booked by the assessee in its’ accounts. Finally, as regards the assessee’s plea for being allowed expenses some expenses would inevitably be incurred, we consider it proper that the same be allowed; reasonableness being the essence of any assessment, on an ad hoc, estimate basis, at ₹ 1 lac and ₹ 1.20 lacs for A.Y. 2007-08 and 2009-10 respectively, so as to cover all sundry expenses that may be incurred in the activity of raising bills. Before parting, we may also add that the assessee’s assessment u/s.23(5) of MVAT, 2002 dated 22.03.2013 for the financial year 2008-09 (copy of the order on record, at PB pgs. 3-7) shows the assessment of tax payable under the said Act at ₹ 15,98,735/-. The same, though allowable, being a tax, its deductibility would be subject to section 43B. - Decided partly in favour of assessee.
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