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2018 (10) TMI 1598 - AT - Income TaxAddition on account of capital introduction from undisclosed sources - CIT-A deleted the addition - Held that:- We find that the assessee had duly reconciled and explained the introduction of capital of ₹ 39,10,000/- in his personal balance sheet and that it indeed formed part of the additional income of ₹ 70,00,000/- disclosed at the time of survey. The Ld. CIT(A) was therefore right in observing that assessee was able to explain the entries in his balance sheet and that the addition of ₹ 39,10,000/- made by the AO was unwarranted. - Decided against revenue. Addition on account of unaccounted transportation expenses - expenses found recorded in the material impounded in the course of survey - assessee submitted that when the books of account of the assessee are rejected and the Gross Profit rate is estimated, no other additions by making specific disallowance of the expenses could be made - Held that:- It is noted that there is no dispute with regard to the rejection of books of accounts. We are of the considered view that when the GP rate is applied by rejecting the books result, no further addition on account of any item of specific expenses are required to be made because the books of account could not be relied for the purpose of completing the assessment of the assessee and it is for that reason that the AO has resorted to estimation of profit earned by the assessee on the overall sales - Decided against revenue. Estimating the GP rate at 1% instead of 1.5% as estimated by the AO - Held that:- It is noted that the income-tax assessments for the earlier years were framed u/s 143(3) and in those years the trading results of the assessee had been accepted by the Department. From the chart submitted before us, we find that the assessee has disclosed the fair rate of gross profit in comparison to the earlier years. In the circumstances the profit declared by the assessee in earlier years cannot be brushed aside for estimating the profit of the relevant year until and unless, there are changes in the facts and circumstances or the AO brings any results of comparable cases to justify his action, which is not the case here in hand - we find merit in the action of the Ld. CIT(A) in estimating the profit at 1% after taking into consideration the profit of earlier years declared by assessee.- Decided against revenue.
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