TaxTMI 
TaxTMI 
A.O has applied rate of profit in case of civil contractor and also made additions u/s 68 for cash deposited in Bank.My query is regarding addition u/s 68 is weather A.O is justified in making separate additions when he has rejected books of account and applied net profit rate. I wants case laws in support.
Addition u/s 68 - applied rate of profit
03 Dec 2009 
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Additions under section 68 challenged where net profit rate applied-issue turns on proved cash generation and capacity to pay.
Assessment officer applied a net profit rate after rejecting books and made separate additions under section 68 for cash bank deposits. The controlling enquiry is whether the applied profit rate, after adjusting for changes in current assets and liabilities, explains the cash generation used for deposits, and whether the persons credited meet tests of identity, creditworthiness and capacity to pay. Conflicting appellate outcomes reflect fact finding; where a tribunal misreads records, a rectification petition may be pursued. (AI Summary)
Assessment officer applied a net profit rate after rejecting books and made separate additions under section 68 for cash bank deposits. The controlling enquiry is whether the applied profit rate, after adjusting for changes in current assets and liabilities, explains the cash generation used for deposits, and whether the persons credited meet tests of identity, creditworthiness and capacity to pay. Conflicting appellate outcomes reflect fact finding; where a tribunal misreads records, a rectification petition may be pursued. (AI Summary)