The Tax Publishers2022 TaxPub(DT) 5244 (Ahd-Trib) : (2023) 198 ITD 0004

INCOME TAX ACT, 1961

Sectuib 145(3)

Getting books of account audited did not debar the assessee to provide necessary supporting documents along with books of account as appearing in the audited financial statements. Accordingly, in the absence of necessary books of accounts and supporting materials, the income of assessee could not be deduced. Thus, the only option available with AO was to determine profit of the assessee in the scientific manner. Thus, AO rightly rejected assessee's books and took other assessee engaged in similar business for comparable and estimated net profit of the assessee at 1.5% of the turnover.

Accounting method - Rejection - Estimation of profit - Assessee pleaded books of account to be audited

Assessee was a partnership firm and engaged in the business of purchase and processing of raw cotton, trading of cotton bales and seeds. It showed the turnover of Rs. 25,34,48,526 on which it declared gross profit of Rs. 84,46,956 and net profit of Rs. NIL. Assessee was asked to furnish details of purchase and sale registers along with copy of invoices, unit wise yield of production and details of closing stock along with method of valuation. But assessee failed to submit copy of invoices, unit wise yield of production etc. despite several reminders. Therefore, AO rejected the books of account and estimated net profit at 1.5% only. Assessee challenged this pleading that it had maintained all the quantitative details and books of account which were duly audited and certified by the qualified auditor and therefore, same could not be rejected without assigning any reason. Held: Getting books of account audited did not debar the assessee to provide necessary supporting documents along with books of accounts as appearing in the audited financial statements. Accordingly, in the absence of necessary books of account and supporting materials, the income of assessee could not be deduced. Thus, the only option available with AO was to determine profit of the assessee in the scientific manner. Thus, AO rightly rejected assessee's books and took other assessee engaged in similar business for comparable and estimated net profit of the assessee at 1.5% of the turnover.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2013-2014 & 2014-15


INCOME TAX ACT, 1961

Section 145(3)

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