TMI Blog2010 (10) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of plumbing service expenses. (3) On the facts and in the circumstances of the case, the ld. CIT(A)-XIII, Ahmedabad ought to have upheld the order of the AO. 2. There are two issues involved in this appeal first relates to GP and the other relates to disallowance of plumbing services. 3. The facts of the case are that assessee is engaged in the business of trading in sanitary wares, bathroom fittings and accessories etc. During the course of assessment proceedings the AO noticed that assessee has shown lower GP rate as compared to proprietary concerns of the partners of the assessee firm. Three proprietary concerns of the partners dealing in similar line of business had declared following GP rates :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not following any method of accounting regularly. The profits could not be estimated without rejecting the books of accounts as held by various Courts as under :- (1) Madnani Construction Corporation (P) Ltd. vs. CIT (2008) 296 ITR 45 (Gau) (2) CIT vs. Rajni Kant Dave (2006) 281 ITR 0006 (All) (3) Ashoka Refractories P. Ltd. vs. CIT (2005) 279 ITR 0457 (Cal) (4) Juggilal Kamlapat Udyog Ltd. vs. CIT (2005) 278 ITR 0052 (Cal) (5) CIT vs. Vikram Plastics (1999) 239 ITR 0161 (Guj) In the case of DCIT vs. M/s Associated Petroleum Corporation in ITA No.2308/Ahd/2008 Asst. Year 2004-05 and vice versa, pronounced on 31.8.2010 the Tribunal, (Ahmedabad Bench) has observed about rejection of books and estimation of profits as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruptly changing method of accounting from cash to mercantile or for different transactions it is adopting different method of cash or mercantile. For this the AO has to identify the transactions recorded in different methods or identify the Asst. Years, in which different accounting methods (cash or mercantile) have been followed. Every finding relating to three conditions has to be based on evidence and should not be merely an opinion of the A.O. Further, it is not always correct to resort to estimation after rejecting the books if adequate material is not available to support the estimation of higher income as compared to what assessee has shown. Thus rejection of the books in accordance with section 145 is the initial step before AO reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained by the assessee, then rejection of accounts would be invalid. Hon. Gujarat High Court in Commissioner of Income-tax Vs. Vikram Plastics [1999] 239 ITR 0161- [Guj] has held that where books of accounts have been maintained regularly and no defects have been found in the accounts then the Tribunal would be justified in holding that accounts cannot be rejected under section 145. Accordingly we hold that books of assessee cannot be rejected and, therefore, AO cannot resort to estimation of income by estimating losses. Accordingly, the appeal filed by the Department is dismissed. Since none of the ingredients of section 145(3) are shown to be present, we uphold the order of ld. CIT(A) in deleting the addition. This ground of Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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