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2006 (10) TMI 145 - HC - Income TaxRejection of books of account – change in gross profit rate - assessee-appellant is doing business of trading in pan masala and other connected commodities. The assessee has furnished return of income showing ₹ 4,48,280 as taxable income along with the audit report. - the Assessing Officer noticed that there is fall in the gross profit rate in the business as a whole as compared to the gross profit rate shown by the assessee during the last assessment year 1991-92. The assessee has shown in the previous year gross profit rate of 4.63 per cent, by taking entire business as a whole, but this year he has shown the gross profit rate of 2.38 per cent. only. With this premise, he decided to reject the books of account and asked for explanation of the assessee about the fall in the gross profit rate - Held that - Mere deviation in the gross profit rate cannot be a ground for the rejecting the books of account, and entering the realm of estimate and guesswork. Lower gross profit rate shown in the books of account during the current year and fall in the gross profit rate was justified
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