TMI Blog2018 (2) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... t. AO in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. Additional Rent paid by cheque for using the godown - the assessee failed to show any justification for payment of additional rent because there was no agreement between the assessee and landlord for payment of additional rent. The assessee could obtain a confirmation exhibiting additional space required as well as additional rent paid. But no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61,133/-. 3. Brief facts of the case are that the assessee-firm has filed its return of income on 3.9.2011 declaring total income at ₹ 8,16,431/-. The assessee at the relevant time was engaged in the business of trading in cotton bails and seeds. It has achieved turnover of ₹ 19.56 crores and disclosed a net profit at 0.42% which is far less in comparison to 0.91% and 1.26% achieved in Asstt.Year 2010-11 and 2009-10 respectively. Hence, the AO investigated accounts of the assessee. The ld.AO highlighted various discrepancies, and thereafter he rejected book results, estimated net profit at 0.91% which worked out ₹ 17,80,750/-. He made addition of ₹ 9,61,133/-. The ld.CIT(A) has issued a show cause notice for enhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains of business or profession or Income from other sources shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time [accounting standards] to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) [or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee], the Assessing Officer may m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. Thus, the case of law of ld.counsel are of no help. 7. During the course of assessment proceedings, the ld.AO has noticed various discrepancies. These have been tabulated by the ld.cousnel for the assessee. They read as under: Sr. No. Ground Raised by Assessing Officer Contention of C1T (Appeals) while passing the order 1 Reduction in Gross Profit and Net Profit Margin as compared to previous financial year. No Comment of CIT(A) in his order. Refer Para 2. land Para 4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s submission was accepted. The point of interest disallowance was not taken in the show cause notice issued by hon'ble CIT(A) 8. I have examined record carefully and gone through order of the ld.CIT(A), in the light of the above discrepancy and explanation of the assessee. To my mind, the assessee failed to show any justification for payment of additional rent because there was no agreement between the assessee and landlord for payment of additional rent. The assessee could obtain a confirmation exhibiting additional space required as well as additional rent paid. But no such steps were taken. Similarly, the assessee failed to demonstrate as to what services have been rendered by her husband or the daughter to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
