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2021 (7) TMI 796 - AT - Income TaxRejection of books of accounts - Addition by applying net profit rate of 7% as against net profit declared by assessee at 6.5% - HELD THAT:- The rejection of books of account would not be ipso facto result in an addition to the income declared by assessee if G.P./N.P. declared by assessee is better than the past history of G.P./N.P. or any other reasonable criteria/guidance to be considered as basis for estimation of income. The assessee has declared net profit at 6.5% on turnover of 7.25 crores is higher than the N.P. declared by assessee in preceding year and in the absence of any reasonable basis, criteria or guidelines applied by AO the adoption of net profit at 7% is not justified. The decision relied upon by Ld. DR in the case of PCIT Vs. Rimjhim Ispat Ltd. [2016 (1) TMI 374 - ALLAHABAD HIGH COURT] is in respect of the disallowance of expenses which were made by Assessing Officer @ 10% which were sustained by appellate authorities at 5%, therefore, the said decision is only on the point of reasonable disallowance of expenses and not on the estimation of income after rejection of books of account. Hence, the said decision would not help the case of revenue. Similarly under similar the decision in the case of Goodyear India Ltd.[2000 (7) TMI 32 - DELHI HIGH COURT] was again on the issue of disallowance of the expenses and not regarding estimation of income after rejection of books of account. Hence in view of the facts and circumstances as discussed above the addition mde by Assessing Officer is not sustainable and the same is deleted. Appeal filed by the assessee is partly allowed.
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