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2016 (7) TMI 26 - ITAT AMRITSAR

2016 (7) TMI 26 - ITAT AMRITSAR - TMI - Estimation of net profits - rejection of books of account - Held that:- Assessing Officer without pointing out any defect in sales and purchases, opening and closing stock rejected the books of account by just holding that assessee had not booked the expenditure whereas the learned CIT(A) has made a finding of fact that the expenditure was duly booked in the books of account and was reflected in the P&L accounts and payments thereof were made through bank .....

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Assessing Officer for rejection of books of account is also not valid. The Assessing Officer without comparing earlier year results of the assessee applied 6% net profit rate without any basis and therefore, action of learned CIT(A) in deleting such addition is justified. Similarly, the assessee had declared the income on account of Duty drawback etc. separately in P&L account and therefore, the addition was not justified and learned CIT(A) has rightly deleted the same.- Decided in favour of ass .....

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A) had rightly deleted.- Decided in favour of assessee - I.T.A. No. 509 (Asr)/2013 - Dated:- 6-5-2016 - Sh. A. D. Jain, Hon ble Judicial Member And Sh. T. S. Kapoor, Hon ble Accountant Member For the Appellant : Sh. S. S. Kanwal (DR.) For the Respondent : Sh. Sudhir Sehgal (Adv.) ORDER Per T. S. Kapoor (AM) This is an appeal filed by Revenue against the order of learned CIT(A) dated 13.05.2013 for Asst. Year 2009-10. 2. The grounds of appeal taken by Revenue are reproduced below. (i) On the fact .....

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/-. (iii) On the facts and circumstances whether the Ld. CIt(A) was right in deleting the addition on account of disallowance of license fees amounting to ₹ 17,13,388/-. 3. The appeal was earlier dismissed as being defective vide Tribunal order dated 20.12.2013. However, on an application filed by Revenue the said order was recalled vide Tribunal order dated 12.09.2014 as Revenue had removed the defects/deficiency and the appeal was listed for hearing on merits. 4. At the outset, the learn .....

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6,88,437/-. As regards the third deletion made by learned CIT(A), the learned DR submitted that Assessing Officer during the course of assessment proceedings had observed that an expenditure of ₹ 17,13,388/- was not booked by assessee in its P&L account and for which Assessing Officer had information as per AIR information. It was submitted that learned CIT(A) had deleted these additions without looking into entire facts and without looking into facts that the books of account of asse .....

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earned CIT(A) besides Assessing Officer. He submitted that learned CIT(A) after going thorough the complete records had rightly deleted the addition as the addition made by Assessing Officer was not based upon the facts as assessee had duly recorded the payments. 6. As regards the rejection of books the learned AR submitted that Assessing Officer had rejected the books of account merely holding that assessee had not recorded the expenditure of rent paid to Windsor Hotel Golf Course Road, Banglor .....

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t since the income on account of DEPB Duty drawback etc. was already included in the P&L account no separate addition was warranted and therefore, the learned CIT(A) has rightly deleted the same. 7. We have heard the rival parties and have gone through the material placed on record. We find that Assessing Officer during the course of assessment proceedings rejected the books of assessee and estimated the net profits @ 6% by holding as under: 2.1 Ledger extracts of some of the accounts from t .....

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nt are defective is not containing the full particulars of expenditures and the source thereof during the relevant financial year. This is a serious flaw with the books of account since the total expenditures are not recorded which makes the entire version of books of account suspect. Hence the books of-account/ financial statements furnished by the assessee as well as the audit report is deficient given the fact that these do not reflect complete picture of contemporary record of financial even .....

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and assessee the true income of the assessee for the relevant assessment year than to ignore the books of account and the financial statements furnished by the assessee. After confronting the counsel with the nature of defects observed in the books of account, provisions of section 145(3) are invoked and the books of account/financial statements are rejected and further determination of income is restored to on the basis of the material on records in a manner provided under section 144 of the I .....

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by Assessing Officer for rejection of books of account we find that Assessing Officer without pointing out any defect in sales and purchases, opening and closing stock rejected the books of account by just holding that assessee had not booked the expenditure whereas the learned CIT(A) has made a finding of fact that the expenditure was duly booked in the books of account and was reflected in the P&L accounts and payments thereof were made through bank account and in view of the above facts .....

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s of account is also not valid. The Assessing Officer without comparing earlier year results of the assessee applied 6% net profit rate without any basis and therefore, action of learned CIT(A) in deleting such addition is justified. Similarly, the assessee had declared the income on account of Duty drawback etc. separately in P&L account and therefore, the addition was not justified and learned CIT(A) has rightly deleted the same. 9. As regards rent payments of ₹ 17,13,388/-, we find .....

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