Non-maintenance or non-production of shop-wise stock, inventory, trading and expense records can render accounts substantially incomplete, supporting rejection of books and the declared net-profit rate. Net-profit estimation after rejection must rest on disclosed material, industry standards, operational conditions or market circumstances; unsupported ad hoc rates cannot sustain an addition. Fresh computation may use the average of declared net-profit rates for the preceding five assessment years, with no addition where the recomputed rate is lower than the declared rate. Changes in audited opening sundry-creditor balances require an effective opportunity to establish their nature and source through supporting evidence before unexplained cash-credit treatment.
Non-maintenance or non-production of shop-wise stock, inventory, trading and expense records can render accounts substantially incomplete, supporting rejection of books and the declared net-profit rate. Net-profit estimation after rejection must rest on disclosed material, industry standards, operational conditions or market circumstances; unsupported ad hoc rates cannot sustain an addition. Fresh computation may use the average of declared net-profit rates for the preceding five assessment years, with no addition where the recomputed rate is lower than the declared rate. Changes in audited opening sundry-creditor balances require an effective opportunity to establish their nature and source through supporting evidence before unexplained cash-credit treatment.
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
