INCOME TAX ACT, 1961

Section 145

Accounting method - Computations of profit - Estimation of income -

Assessee was a clearing and forwarding agent and P&L account of assessee showed expenditure. AO asked assessee to produce supporting documents towards the claim of expenditure. Assessee stated that it was re-imbursement of expenses received by assessee which was included as income. There was some discrepancy in the audited accounts filed and informed that the actual gross receipt and expenses shown in the P&L account was not correct, the actual receipt and expenses was less than the amount shown in the audited P&L a/c. Therefore, AO was not satisfied about the correctness and completeness of the account of the assessee and hence, books results of assessee were rejected and AO estimated the income of assessee comparing the gross profit ratio of the assessee itself by making addition on G.P. @ 9 %. Held: Assessee had to prove that the income credited in the P&L account which includes reimbursement of expenses also. Assessee was not able to substantiate the reimbursement of income included in the gross income credited in the P&L account. In the interest of justice, this issue was remanded back to AO to examine afresh and then determine the income of the assessee.

REFERRED :

FAVOUR : Matter remanded

A.Y. :

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