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

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

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.

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