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2021 (10) TMI 502 - ITAT DELHIEstimation of income - Bogus purchases - sole basis of addition was surrender made by the assessee - adoption of profit rate of 0.5% of the turnover by AO HELD THAT:- It is an admitted fact that this is the first year of operation of the assessee-company. The assessee has produced books of account before A.O. and the sales declared by the assessee has not been doubted - A.O. in the subsequent years has accepted the book results i.e., 0.045% in A.Y. 2016-17 under section 143(1) of the I.T. Act, 1961 and 0.029% in the order passed under section 143(3) I.T. Act, 1961 for the A.Y. 2017-18. Therefore, for the impugned assessment year, when the sales has not been doubted and the assessee has produced the books of account including details of purchases, sales, sundry debtors, creditors, stock statement, quantitative of details etc., therefore, adoption of net profit @ 0.5% appears to be on higher side. Adoption of net profit rate of 0.075% under the facts and circumstances of the present case will meet the ends of justice. I hold and directly accordingly. It is also made clear that this profit rate is only for the impugned year for the assessee and cannot be considered as a precedent for other years or for any other assessee. The ground raised by the assessee on this issue is accordingly partly allowed. Addition u/s 68 in respect of share capital - It is an admitted fact that the share capital was invested by the Directors and this is the first year of the incorporation. Therefore, in the year of incorporation the assessee-company in our opinion cannot have income from undisclosed source towards introduction of share capital and addition, if any, could have been made in the hands of the Directors - therefore, set aside the order of the Ld. CIT(A) on this issue and direct the A.O. to delete the addition.
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