SH. VIRENDRA PRAKASH SHARMA,MEERUT vs. ITO, MEERUT

PDF · subscribers
ITA 4522/DEL/2014Status: DisposedITAT Delhi11 February 2016AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that neither the Assessing Officer nor the CIT(Appeals) provided a basis for applying their respective net profit rates. Therefore, their actions were not sustainable.

What were the facts?

The Assessing Officer rejected the assessee's books of account due to lack of supporting bills and vouchers, estimating profit at 8% of turnover. The CIT(Appeals) reduced this to 5% after considering the assessee's explanation about local purchases and lack of pakka bills.

What were the issues?

Whether the authorities below provided a reasonable basis for estimating the net profit rate when rejecting the assessee's books of account.

Which sections of the Income-tax Act were involved?

Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “CAMPT AT MEERUT” NEW DELHI

Before: SHRI I.C. SUDHIR & SHRI PRASHANT MAHARISHI

For Appellant: Shri Chander Mehra, CA
For Respondent: Shri Sheodan Singh Bhddoria, Sr. DR

ORDER

PER I.C. SUDHIR: JUDICIAL MEMBER The assessee has questioned First Appellate Order whereby the Learned CIT(Appeals) has estimated the profit of the assessee by applying N.P. rate of 5% against 8% applied by the Assessing Officer on the turnover of Rs.2,07,75,740.

2.

Heard and considered the arguments advanced by the parties in view of orders of the authorities below and material available on record.

3.

We find that the Assessing Officer rejected the books of account under sec. 145(3) of the Income-tax Act, 1961 on the basis that 90% of 2 entries in the cash book and ledger are not supported by bills and vouchers. He was of the view that books were not maintained in a manner in which the correct profit of the assessee could be deduced. The Assessing Officer thereafter taking assistance from the provisions of sec. 44AD found it reasonable to apply N.P. rate of 8% on the total receipt to estimate the profit of the assessee which resulted at Rs.16,62,059 against Rs.5,95,807 shown by the assessee from the business. Besides the said income shown from business by the assessee, he had also shown interest income of Rs.1,93,012 from bank.

4.

The assessee contended above action of the Assessing Officer before the Learned CIT(Appeals) with the submission that in its remand report, the ITO-2(4), Meerut had stated that a few bills of assessee were kacha. The assessee contended that the assessee is engaged in the business of erection and commissioning of telecommunication tower which are in remote area and at times materials are urgently needed which are purchased locally. Since shopkeepers in the remote area are not registered with the sales-tax authorities. They do not issue pakka bills. It was further contended that application of sec. 44AD cannot be applied in the case of assessee where turnover exceeds the statutory limit of Rs.60 lacs. Considering all these

More judgments on Section 145(3)

All 3,640 judgments and leading authorities on Section 145(3) →

Recent GST High Court judgments

Search GST case law →