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Income Tax Appellate Tribunal, DELHI BENCHES : A : NEW DELHI
Before: SHRI J. SUDHAKAR REDDY, AM & MS SUCHITRA KAMBLE
ORDER
PER J. SUDHAKAR REDDY, AM:
This is an appeal filed by the assessee directed against the order passed u/s 263 of the Act by the CIT, Meerut on 18.3.2013 for assessment year 2008-09.
The assessee is an individual and is engaged in the business of sale of power to UP Asbestos Ltd. and civil contract work for Turbine installation, boiler installation and husk yard at Lucknow and Dadri sites of UP Asbestos. It filed its return of income on 29.9.2008 declaring income of Rs.6,44,780/-. The assessment was completed u/s 143(3) by making an addition of Rs.1 lac on the ground that certain expenses claimed by the assessee were not properly supported by evidence. The CIT, Meerut, revised this order passed u/s 263 on 18.03.2013 by holding that:
a) The assessee being a civil contractor has shown negligible net profit in the year as compared with the net profit declared in the preceding assessment years 2006-07 and 2007-08; and b) The ld.CIT held that in the interest of justice, net profit rate of entire declared results including interest be taken by the AO at 4%.
2.1. Aggrieved, the assessee is before us.
After hearing the rival contentions, we find that the order of the ld.CIT(A) is bad in law for the reason that books of account have not been rejected either by the AO or by the ld.CIT. Income cannot be estimated without rejection of books of account. The AO made an ad hoc disallowance of certain expenses without rejecting the books of account. In fact, the books of accounts are audited. Under these circumstances, we squash the order passed by the ld.CIT u/s 263 of the Act.
In the result, the appeal of the assessee is allowed.
The order pronounced in the open court on 06.06.2016.