Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 1094 - AT - Income TaxAddition of trade creditors u/s 68 - unexplained cash credits - also making additions of gross profit after rejecting the book results u/s 145(3) - Held that:- AO admits these cash sales as unexplained in the absence of confirmation by the parties. Admittedly, these are trade creditors and not cash creditors because the assessee has deposited the cash in its trading bank account out of the proceeds of sales, although those are not verified. It means that these have relation with trading entries and these are not independent cash credits. On the other hand, the Assessing Officer is also rejecting the books of account u/s 145(3) and applied profit rate and making addition by enhancing the income of ₹ 6,09,366/- to ₹ 19,57,569/-. We find from the above facts in entirety that the Assessing Officer cannot blow hot and cold at the same time for the reason he has made twin additions out of the trading results i.e., treating the cash sales as cash credit and adding the same u/s 68. AO is very well within the power of rejecting the book results u/s 145(3) and we confirm the action of the Assessing Officer. However, we find that the Assessing Officer has applied profit rate of more than 8% and assessee’s nature of business is trading in steel and iron, which does not give this much profit and assessee’s regular profit is assessed at the rate of 2.5% to 3% and it varies from year to year in between the same. In view of the above position, we are of the view that a reasonable profit rate at the rate of 5% should be estimated on the above sales and not at the rate of 8% or above 8% Not allowing the claim of deduction of LIC etc. under Chapter VIA of the Act - Held that:- We direct the Assessing Officer to take evidences from the assessee and accordingly allow the claim of the assessee as per law.
|