M/S. L.P.R. CONSTRUCTION,ALLAHABAD vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, ALLAHABAD

ITA 257/ALLD/2018Status: DisposedITAT Allahabad05 July 2021AY 2013-145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's rejection of books of accounts did not automatically warrant an addition if the declared profit was better than the past history. The AO's estimation of income at 7% was deemed arbitrary and unjustified due to the lack of a proper basis and the fact that the assessee's declared profit was higher than the previous year.

What were the facts?

The Assessing Officer rejected the assessee's books of accounts and estimated income by applying a net profit rate of 7% on turnover, which was higher than the 6.5% declared by the assessee. The assessee argued that their declared profit rate was better than the previous year and that the AO incorrectly applied Section 44AD.

What were the issues?

Whether the addition made by the Assessing Officer by estimating income at a higher net profit rate than declared by the assessee, after rejecting books of account, is justified. Whether Section 44AD can be invoked when the turnover exceeds its limits.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 145(3),Section 44AD,Section 234A,Section 234B

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Income Tax Appellate Tribunal, ALLAHABAD BENCH ‘SMC’ ALLAHABAD

Before: SHRI.VIJAY PAL RAO

For Appellant: Shri Praveen Godbole, CA
For Respondent: Shri A.K. Singh, CIT ( Sr. DR)
Hearing: 13.07.2021Pronounced: 15.07.2021

PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER:

This appeal of the assessee is directed against the order dated 10.05.2018 of Ld. CIT(A), Allahabad for the A.Y. 2013-14. 2. The assessee has raised the following grounds.:- “1. That in any view of the matter assessment order dated 30.03.2015 passed u/s 143(3) of the Income Tax Act is bad both on the facts and in law and in the circumstances of the case. Therefore in all fairness the declared income on the basis of closed books of accounts should have been accepted in the interest of justice.

2.

That in any view of the matter net profit rate of 7 % as applied by Assessing Officer by applying the provision of Section 143(3) of the Income Tax Act is highly

The order continues below.

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