INCOME TAX ACT, 1961

Section 145

Accounting method - Estimation of net profit at higher rate than what stated in show cause notice issued by AO - Sale of liquor -

Assessee challenged trading addition made by AO applying Net Profit rate at 8% of liquor sale instead of 6% as stated in show cause notice issued by AO. Held: When AO proposed to estimate the income by applying net profit at 6%, then adopting the net profit at 8% without giving the reasons for change of its stand and increasing the net profit percentage for estimation of the income was not justified. When AO had not given any reasonable and proper basis for adopting net profit at 8% to estimate the income of the assessee from liquor business then the original proposed net profit at 6% as shown in the show cause notice and confronted with the assessee ought to have applied for estimation of the income. Accordingly, estimation of income from the liquor business was restricted to 6%.

REFERRED :

FAVOUR : Partly in assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 143(3)

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