TMI Blog2010 (12) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... f everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the assessee Whether the Assessing Officer after rejecting the books of accounts of the assessee and having computed the income of the assessee on best judgment assessment basis, by applying the principle of percentage of profits, is entitled to add back the amounts allegedly paid in violation of Section 40A(3) by relying upon the same rejected books of accounts - though the books of accounts of the assessee have been rejected, the Assessing Officer was not justified in adding back the amounts which were found to be paid in violation of Section 40A(3). The second question is answered in favour of the assesee. The appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain the gross profits. Sh. Vinay Kuthiala, learned counsel for the respondent raised a preliminary submission that such an objection cannot be permitted to be raised since this objection was not raised before any of the authorities below. He relied upon the judgment in Chanana Associates vs. Commissioner of Income Tax, ITR 1997 (225) 72 in this regard. The answer to this objection is that once the appellant was challenging the very basic action of rejecting the books of accounts of the assessee and once the books of accounts are rejected, the assessee has a right to claim that his income should not be computed twice and added over twice. Therefore, the second question which arises out of this objection is "Whether the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when the income of the assessee was computed applying the gross profit rate and when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of section 40A(3) and rule 6DD(j). No disallowance could have been made in view of the provisions of Section 40A(3) read with rule 6DD(j) as no deduction was allowed to and claimed by the assessee in respect of the purchases. When the gross profit rate is applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the assessee." In view of the above discussion, we are of the considered view that though the books of accounts of the assessee have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
