TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 494
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....and assessment was completed u/s 143(3) of the Income-tax Act, 1961 (in short 'Act') on 28/12/2011. AO determined the taxable income at Rs. 9,37,170 after making following additions: a) Made addition for non-submitting evidence to claim deduction u/s 80C Rs. 85,504/-. b) The assessee operated bank account and AO found that assessee received deposits to the extent of Rs. 15,80,207/-. AO treated the same as business turnover and adopted 20.22% as net profit from the business, added Rs. 3,19,517/- as income. c) The balance sheet submitted by the assessee, the bank balance shown were Rs. 74,793/- whereas the actual bank balance were Rs. 4,34,636/-. The difference was treated as undisclosed income and accordingly added Rs. 3,59,843/- as incom....
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....of percentage in section 44AD @ 8%) which is applicable where no books of accounts are maintained and therefore, sustaining the addition is totally unjustified, unwarranted both in law and facts. 5. Ld. AR submitted that even before the CIT (A), the assessee categorically stated that no books of account were maintained and the statements were prepared on ad hoc and estimation basis. Even the Assessing Officer relied on bank deposits made in the bank to determine the turnover and estimate the profit, which was later deleted by the CIT(A). 5.1 He also submitted that the assessee's turnover for relevant AY 2009-10 is Rs. 13,55,210/- and the profit disclosed is @ 18.52% not of 20.22% as stated by AO is very much higher than the prescribed ra....
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....4AB. Assessee had opportunity to opt for assessment u/s 44AD. However, assessee chose to declare more than 8%, assessee may have better reason for declaring more than the limit prescribed u/s 44AD. 8. It is noticed that while making addition of Rs. 3,59,843/-, Assessing Officer has taken into consideration total deposits in HDFC Bank account and estimated the turnover at Rs. 15,80,207/-. Even after estimating the turnover based on the bank statement, Assessing Officer chose to take the difference between cash and bank balance to make a separate addition. Once the books results are rejected and turnover is estimated based on the bank statement, it is intriguing as to how the Assessing Officer sought to take into consideration the so called ....
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....nnot have universal application automatically, but, it has to be sparingly used where the facts necessitate a judicial forum to implement the principle. In the present case, the Assessing Officer having estimated the turnover and the percentage of profit, it implies that the books of account were rejected and income is estimated. It also implies that the Assessing Officer is of the opinion that the assessee had earned a specified income from the business of sale of scrap. In such an event, Assessing Officer may not be justified in blowing hot and cold and making a specified addition again based on the balance sheet prepared by the assessee, which was not accepted in totality by the Assessing Officer while estimating the income. At any rate,....