TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>ITAT affirms CIT(A)'s 7% income assessment, rejects Revenue's appeal.</h1> The ITAT upheld the CIT(A)'s decision to assess income at 7% of gross receipts, dismissing the Revenue's appeal. The CIT(A) found the AO's assessment ... - Issues Involved:1. Assessment of income at the rate of 7% of gross receipts.2. Deletion of addition on account of unconfirmed creditors.Summary:1. Assessment of Income at the Rate of 7% of Gross Receipts:The Revenue challenged the order of the CIT(A) directing that income be assessed at the rate of 7% of the gross receipts, thereby allowing relief of Rs. 8,01,99,322/-. The assessee, a firm, filed a return of income declaring Rs. 1,63,89,430/-. The case was selected for scrutiny due to the application of section 44AB. The AO issued a show cause notice for the addition of unconfirmed creditors and disallowance of 50% of expenses due to the non-production of books of account. The AO disallowed 50% of expenses amounting to Rs. 9,16,55,092/- and added Rs. 1,25,33,911/- as unconfirmed creditors. The CIT(A) considered the submissions, remand report, and material on record, and directed to compute the income by applying a net profit rate of 7%. The CIT(A) noted that the AO made an unreasonable basis of assessment by adding entire sundry creditors' balances and disallowing 50% of various expenses, resulting in a high profit margin of around 50%. The CIT(A) found that the NP rate of 7% was justified considering the history of the assessee and the nature of the business.2. Deletion of Addition on Account of Unconfirmed Creditors:The AO added Rs. 1,25,33,911/- as unconfirmed creditors. During the remand proceedings, the assessee produced books of account, vouchers, and confirmations of creditors. The AO verified and confirmed most of the creditors' balances. The CIT(A) deleted the addition on account of creditors' balances, noting that the creditors had provided building material and machinery for the assessee's business activities, and the outstanding amounts were confirmed by the creditors. The CIT(A) held that most of the creditors' balances were verified and confirmed, and the addition was unjustified.Conclusion:The ITAT upheld the order of the CIT(A), dismissing the Revenue's appeal. The ITAT found no error in the CIT(A)'s decision to compute the income by applying a net profit rate of 7% and deleting the addition on account of unconfirmed creditors. The ITAT noted that the CIT(A)'s findings were supported by the decisions of various High Courts and the Privy Counsel, emphasizing that the estimate of income should be fair and based on reasonable considerations. The departmental appeal was dismissed, and the order was pronounced in the open court.
TaxTMI 
TaxTMI 
