2016 (10) TMI 1068

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....s well as the addition by rejecting some of the purchases can be made simultaneously and whether this would not tantamount to double addition ?" 3. Counsel for the appellant has contended that the assessee's books of account were rejected and they were assessed on the basis of estimation and while estimating the other income also addition was made under section 69C of the Income-tax Act which would amount to double taxation while estimating the income. While rejecting the books of account, the Assessing Officer has considered the overall turnover for the head as has been detailed as under : "Subject to the above remarks total income is computed as under :     Net profit as per profit and loss account   2,47,877 Ad....

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....tax the amount of Rs. 16,950 as income from undisclosed source, even though he had added the amount of Rs. 18,117 in addition to the profits shown by the respondent-firm in its account books. However, the assessee was well within his rights to plead that this amount of Rs. 16,950 is covered by the intangible income assessed at Rs. 18,117 and added to the income of the firm and apart from this, since for the last preceding three years, substantial additions amounting to Rs. 32,797 have been made, the amount of Rs. 16,950 could be taken as having come out of such intangible additions. In the facts and in the circumstances of the case, the Tribunal was right in treating the unexplained cash credit entries to the extent of Rs. 16,950 as cover....

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.... "Accounts-Rejection-Profit estimated at flat rate-Further addition on account of cash credits-Income-tax authorities cannot adopt a flat rate to compute gross profit as well as rely on the books for purpose of adding unexplained cash credit which were part of the scheme of balancing the accounts. The Tribunal was careful in emphasising that it is basing its computation on the estimate of 9.5 per cent. and not upon any of the items which were taken into account by the Income-tax authorities. The scrutiny by the Tribunal of the items of addition made by the Income-tax authorities was merely for the purposes of showing that the accounts could not be relied upon. The contention that the Tribunal having adopted as the basis of assessment a gr....

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....e with the provisions contained in sections 30 to 43D. Section 40 provides for certain dis allowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under section 29 is to be made under section 145 on the basis of the books regularly maintained by the assessee. If those books are not correct or complete, the Income-tax Officer may reject those books and estimate the income to the best of his judgment. When such an estimate is made it is in substitution of the income that is to be computed under section 29. In other words, all the deductions which are referred to under section 29 are deemed to have been taken into account while making such an estimate. This will also mean that ....