Appeal partly allowed for statistical purposes, estimation of profits set aside pending judgment. Disallowance of expenses upheld.

The appeal was partly allowed for statistical purposes. The rejection of books of account under section 145(3) of the Act was dismissed as the appellant did not press the ground. The estimation of profits on unverifiable purchases was set aside pending a judgment by the Hon'ble Rajasthan High Court. The disallowance of certain expenses was upheld due to lack of supporting evidence and compliance, with the judge finding no reason to disturb the AO's estimate. The appeal on this issue was consequently dismissed.

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Issues:
1. Rejection of books of account under section 145(3) of the Act
2. Estimation of profits on unverifiable purchases
3. Disallowance of certain expenses

Analysis:

Issue 1: Rejection of books of account under section 145(3) of the Act
The appellant raised the issue of the rejection of books of account under section 145(3) of the Act. However, during the hearing, the appellant did not press this ground, leading to its dismissal.

Issue 2: Estimation of profits on unverifiable purchases
Regarding the estimation of profits on unverifiable purchases, the appellant referred to a previous ITAT order and requested the matter to be set aside until a judgment by the Hon'ble Rajasthan High Court. Both parties agreed to this course of action, and the ITAT judge concurred, setting aside the issue for the AO to decide afresh post the High Court judgment.

Issue 3: Disallowance of certain expenses
The appellant contested the disallowance of various expenses, citing precedents from previous years where similar disallowances were restricted by the ITAT. The appellant sought a similar approach. The respondent argued that the disallowance was based on scientific grounds due to lack of supporting evidence. The judge upheld the disallowance, noting the appellant's failure to address deficiencies in record-keeping and compliance, finding no reason to disturb the AO's estimate. Consequently, the appeal on this issue was dismissed.

In conclusion, the appeal was partly allowed for statistical purposes, with different issues addressed and decided upon based on the arguments presented by both parties and the relevant legal provisions.

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