INCOME TAX ACT, 1961

Section 145(3)

Accounting method - Rejection - Estimation of profit - Particular pattern followed by assessee found to be defective--Assessee pleading deficiency to be not relating to concerned assessment year and no comparable case brought by AO

AO rejected book results of assessment year 2012-13 by considering the various types of deficiencies noticed by search team and estimated net profit @ 4.50. Assessee contended that AO should not have rejected book results of assessment year 2012-13, as alleged deficiencies did not relate to the financial year relevant to assessment year 2012-13 and further, AO had not brought any comparable cases to determine gross profit @ 4.50%. Held: Deficiencies noticed by search team could not be considred to be assessment year specific, since search team had found out particular pattern followed by assessee, which was found to be defective and further state of affairs of business carried on by assessee was found to be unreliable, according AO was justified in rejecting book results, however, after rejection of book results, rate of tross profit could be determined by considering gross profit level declared by comparable cases but AO had not done so. Accordingly, matters relating to estimation of gross profit rate by considering comparable cases was remanded to AO for verification afresh.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13 & 2013-14

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