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| The Tax Publishers2019 TaxPub(DT) 0638 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 145
When GP rate was applied by rejecting the books result, no further addition on account of any item of specific expenses were required to be made because books of account could not be relied on for purpose of completing the assessment of assessee and it was for that reason that AO had resorted to estimation of profit earned by assessee on overall sales.
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Accounting method - Addition on account of unaccounted transportation expenses - Estimation of income -
A survey conducted at the assessee's premises under section 133A, evidence of sales and purchases outside the books was found. With reference to such business conducted outside the regular books, assessee had disclosed a profit. AO, however rejected the books of account and estimated a higher profit than the profit disclosed and offered to tax by assessee. Apart from estimating profits, AO made specific addition on account of unaccounted transportation expenses found recorded in the material impounded in the course of survey. On appeal, CIT(A) deleted the addition. Held: There was no dispute with regard to rejection of books of account. When GP rate was applied by rejecting the books result, no further addition on account of any item of specific expenses were required to be made because books of account could not be relied on for purpose of completing the assessment of assessee and it was for that reason that AO had resorted to estimation of profit earned by assessee on overall sales.
Relied: CIT v. Agarwal Engg & Co. Ltd. (2008) 302 ITR 246 (P&H-HC) : 2008 TaxPub(DT) 274 (P&H-HC) CIT v. B.N. Muttin (2016) 388 ITR 608 (Karn-HC) : 2016 TaxPub(DT) 4096 (Karn-HC) Indwell Constructions v. CIT (1998) 232 ITR 776 (AP-HC) : 1998 TaxPub(DT) 1253 (AP-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 263
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