2015 (5) TMI 998

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.... added by the Assessing Officer by estimating the income after rejecting the book result of the assesse. 3. The brief facts of the case are that ssessee has filed its return of income on 24th September, 2008 declaring income of Rs. 7,00,260/-. The case of the assesse was selected for scrutiny assessment and a notice u/s. 143(2) was issued and served upon the assesse. On scrutiny of the account, it revealed to the Assessing Officer that assesse has been trading in grey cloth. It has shown total turn-over of Rs. 18.64 crores but the GP shown by the assesse is very meager i.e. at 0.20%. The assessing Officer has confronted the assesse, as to why its book result should not be rejected and the profit should not be estimated. The assesse has s....

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....ng GP rate of 2.5%. Accordingly, he made an addition of Rs. 42,87,880/-. 4. On appeal, Ld. CIT(A) has deleted the addition by observing that assessing Officer failed to point out any defects in the books of account of the assesse, therefore he cannot estimate the GP. 5. Before us, LD. DR submitted that closing stock details were not maintained by the assessee. Therefore, it was not possible for the Assessing Officer to deduce true income from the account. He relied upon the order of the Assessing Officer. On the other hand, learned counsel of the assesse contended that assesse was not having any opening stock or closing stock, therefore, there cannot be any question to maintain the stock statement. It had booked order in bulk i.e. whe....

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....rofits and gains of the business or professions or income from other sources" shall be computed in accordance with the method of accountancy employed by an assessee regularly subject to the sub-section (2) of section 145 of the Act. Sub-section (2) provides that the Central Government may notify in the Official Gazette from time to time the accounting standard required to be followed by any class of assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of accountancy followed by an assessee, i.e., cash or mercantile. Such method has to be followed keeping in view the accounting standard notified by the Central Government from time to time. Sub-clause (3) provides a situat....