2004 (9) TMI 15

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.... 20 per cent, has been rejected. The Assessing Officer had rejected the books of the assessee and determined the income from bakery business by applying a net profit rate of 20 per cent, to the declared sales of Rs. 2,28,60,250. The basis for applying a net profit rate of 20 per cent, was that the assessee had made a declaration under section 68(2) of the Voluntary Disclosure of Income Scheme, 1997, in which a sum of Rs. 5 lakhs had been offered for assessment on undeclared sale of Rs. 19,10,000 made through one Shri Jai Parkash, Proprietor, M/s. National Engineering Works, Patiala. The Tribunal has disapproved this approach. Although the rejection of books of account has been upheld but it has been observed that the income had to be dete....

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.... the books of account and debited various expenses in the profit and loss account. Nowhere in the assessment order the Assessing Officer has pointed out any defect in the various expenses debited to the profit and loss account. The Assessing Officer can be justified in applying the net profit rate of 20 per cent, only if on the basis of entries in the books of account he comes to the conclusion that the assessee had inflated certain expenses or these expenses were not fully supported by bills and vouchers. No such finding is recorded in the assessment order. Thus, we are of the opinion that estimating the income by applying the net profit rate of 20 per cent, in respect of the declared sales without pointing out any instance of inflation of....