The Tax Publishers2020 TaxPub(DT) 1839 (P&H-HC)

INCOME TAX ACT, 1961

Section 145

Where gross profit as per the previous year was considered by AO which could not be said to be excessive or arbitrary and there was no convincing reason put forth by the assessee justifying the low G.P. Rate, therefore, appeal of assessee was dismissed.

Accounting Method - GP rate estimation - Rejection of books of Accounts -

A search was conducted on business premises and an excess stock was found and it was noted that various books of account were not written upto date. Assessee failed to explain the source of investment but a partner surrendered a sum. AO while framing assessment considered various aspects including that high consumption of electricity for per quintal production and the fact that G.P. Rate worked out to 1.12% as compared to 4.49% for the assessment year 1988-89, 2% for the assessment year 1989-90 and 3% for the assessment year 1991-92 and rejected the books of account. Income was assessed applying rate of 2% as shown in the previous year. Held: The gross profit as per the previous year was considered by AO which could not be said to be excessive or arbitrary. Tribunal came to the conclusion that surrendered amount was on account of un-explained investment in the stock. There was no convincing reason put forth by assessee justifying the low G.P. Rate. Therefore, appeal of assessee was dismissed.

REFERRED :

FAVOUR : Against the assessee

A.Y. :



IN THE PUNJAB & HARYANA HIGH COURT

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