2013 (12) TMI 253

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.... Bench, Amritsar, whereby order dated 14.3.1990 passed by the Commissioner of Income Tax (Appeals), Bhatinda setting aside the assessment order, has been affirmed. The revenue has framed the following questions of law: "(i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in sustaining the order of the CIT(A) vide which the CIT(A) deleted the addition of Rs.1,98,295/- so made by the Assessing Officer under Section 68? (ii) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that where flat rate for assessment is adopted after rejecting books of accounts, ITO cannot make addition on account of unexplained credit entry in books of the assessee as undisclo....

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....ed by the A.O. concerned, in our opinion, looking into the facts that the assessee is a Labour Contractor, the CIT(A) was not fair and reasonable to apply the G.P. rate of 12.5% against the rate of 10% applied by the A.O., which was also agreed by the assessee. The D.R. has also conceded that it would be very fair and reasonable to apply the net profit rate of 10% in the case of the assessee. 10. In view of the above discussion, the ground of the assessee taken in the C.O. as well as the C.O. of the assessee succeeds and hence it is concluded that it is fair and reasonable to apply a net rate of 10% in the case of the assessee while calculating the profits. x x x 13. After going through the order of the CIT(A), we are of the consid....

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....t the operation of Section 68 of the Act. It is further submitted that Section 68 of the Act is a general provision applicable in all situations whether account books have or have not been rejected. The impugned orders having been passed by ignoring Section 68 of the Act, are illegal and may, therefore, be set aside. Counsel for the assessee, per contra, submits that Section 68 of the Act applies to situations where account books have not been rejected and no credible explanation is offered by the assessee for suspicious entries. The Assessing Officer having rejected account books and calculated income on an estimated rate of profit, no additions could be made on account of unexplained entries in the account books. In support of his cont....