TMI Blog2016 (6) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... had earned a specified income from the business of sale of scrap. In such an event, Assessing Officer may not be justified in blowing hot and cold and making a specified addition again based on the balance sheet prepared by the assessee, which was not accepted in totality by the Assessing Officer while estimating the income. At any rate, in the instant case, Assessing Officer having not specified any section/provision, the addition made by the Assessing Officer in our considered opinion is not sustainable. If a separate addition has to be made, the onus is upon the Assessing Officer to bring on record some evidences to justify that the assessee had actually earned undisclosed income over and above what was estimated from the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selected for scrutiny and assessment was completed u/s 143(3) of the Income-tax Act, 1961 (in short Act ) on 28/12/2011. AO determined the taxable income at ₹ 9,37,170 after making following additions: a) Made addition for non-submitting evidence to claim deduction u/s 80C ₹ 85,504/-. b) The assessee operated bank account and AO found that assessee received deposits to the extent of ₹ 15,80,207/-. AO treated the same as business turnover and adopted 20.22% as net profit from the business, added ₹ 3,19,517/- as income. c) The balance sheet submitted by the assessee, the bank balance shown were ₹ 74,793/- whereas the actual bank balance were ₹ 4,34,636/-. The difference was treated as undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng certain expenditure @ instead of 20.22%) as stated by AD is far excess than the rate of percentage in section 44AD @ 8%) which is applicable where no books of accounts are maintained and therefore, sustaining the addition is totally unjustified, unwarranted both in law and facts. 5. Ld. AR submitted that even before the CIT (A), the assessee categorically stated that no books of account were maintained and the statements were prepared on ad hoc and estimation basis. Even the Assessing Officer relied on bank deposits made in the bank to determine the turnover and estimate the profit, which was later deleted by the CIT(A). 5.1 He also submitted that the assessee s turnover for relevant AY 2009-10 is ₹ 13,55,210/- and the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee. No doubt, the turnover of the assessee is less than the turnover prescribed for tax audit u/s 44AB. Assessee had opportunity to opt for assessment u/s 44AD. However, assessee chose to declare more than 8%, assessee may have better reason for declaring more than the limit prescribed u/s 44AD. 8. It is noticed that while making addition of ₹ 3,59,843/-, Assessing Officer has taken into consideration total deposits in HDFC Bank account and estimated the turnover at ₹ 15,80,207/-. Even after estimating the turnover based on the bank statement, Assessing Officer chose to take the difference between cash and bank balance to make a separate addition. Once the books results are rejected and turnover is estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple was laid down by the Apex Court in the case of P.K. Noorjahan, 237 ITR 570 (SC). In our considered opinion, though, this principle cannot have universal application automatically, but, it has to be sparingly used where the facts necessitate a judicial forum to implement the principle. In the present case, the Assessing Officer having estimated the turnover and the percentage of profit, it implies that the books of account were rejected and income is estimated. It also implies that the Assessing Officer is of the opinion that the assessee had earned a specified income from the business of sale of scrap. In such an event, Assessing Officer may not be justified in blowing hot and cold and making a specified addition again based on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is-a-vis turnover estimated by the Assessing Officer works out to approximately 43%, which in our humble opinion, is absurd in the line of this business, not only because of the fact that the Assessing Officer himself estimated arbitrary profit rate of 20.22%, but, also having regard to the past record of the assessee where the assessee has declared the profit range between 15 to 18%, which was accepted by the Assessing Officer. 8.3 On conspectus of the matter, we are of the view that the Assessing Officer is not made out a case for making a separate addition of ₹ 3,59,843/- and, therefore, we hereby delete the impugned addition and direct the Assessing Officer accordingly. 9. In the result, appeal of the assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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