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2022 (4) TMI 690 - HC - Income TaxNet profit estimation - percentage completion method for calculating the profits of the Assessee - tribunal determining the net profit @ 6.45% on the value of unsold closing stock - HELD THAT:- There is merit in contention of the Assessee that there cannot be an estimate of net profit on the basis of the value of ‘unsold closing stock’. Without there being sales of the stock it would not be possible to estimate the net profit. Moreover, there has been no rejection of the books of account of the Assessee which reflects the ‘Completed Services Contract Method’ of accounting consistently followed by the Assessee. This was lost sight of by the ITAT as well as the CIT (A). That this has been the consistent practice of the Appellant was easily verifiable from the returns already filed in the earlier AYs. The questions framed by this Court are answered in favour of the Assessee and against the Department by holding that the ITAT was not justified in following the percentage completion method for calculating the profit of the Assessee for the AY in question and determining the net profit @ 6.45%. The ITAT also erred in declining the Appellant Assessee an opportunity of producing its books of account. The impugned order of the ITAT and the corresponding orders of the CIT (A) and the AO on this point are hereby set aside.- Decided in favour of assessee.
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