TaxTMI 
TaxTMI 
2017 (12) TMI 854
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....Appeals) erred in confirming the action of the Assessing Officer in rejecting the books of account and in resorting to estimation of income. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in estimating the net income at 2% of the gross receipts". Ground No. 4 is general in nature. 3. Briefly stated, assessee is an individual deriving income from processing and trading in cotton. For the AY. 2013-14, assessee sold cotton of the value of Rs. 22,14,91,192/- and the gross profit derived was Rs. 66,48,208/-. The net profit after claiming the expenditure was Rs. 5,58,607/-. Proper books of account stated to have been maintained and assessee got the books of account audite....
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.... resorted to estimation of income. The Assessee is prepared to produce the details before the Assessing Officer. Without prejudice to the above, the appellant submits that the AO is not justified in estimating the net income at 2%. In so far as trading in cotton is concerned, the rates would not be consistent and would be varying too often. The purchases made by assessee are verifiable and the sales are also verifiable. The gross profit derived by assessee is about 3%. Therefore, the Assessing Officer ought not to have rejected the books of account and resorted to estimation of income at 2%. The Assessing Officer ought to have seen that the details of the stocks were properly maintained and the said details were also filed along wi....
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....ith all the 142(1) would entail best judgment assessment. For non-compliance with a notice under section 142(1) calling for furnishing information, documents, evidence, books of accounts etc., best judgment assessment can be made under section 144 [L. Hiralal vs. CIT (1942) 10 ITR 148 (All) and BansiDhar & Sons vs. CIT (1980) 17 CTR (Del) 216J]. The wordings in the section are quite clear when they say "fails to comply with all the terms of the notice issued under sub-section (1) of section 142 .... ".Hence the partial compliance also entails a best judgment assessment. In NARINDER KUMAR & ORS. vs. CIT (2014) 369 ITR 0049 (Delhi) it was held that where the assessee failed to produce books of accounts and details, AO is jus....
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....unts are correct or complete. In this situation the A.O. was left with no option but to estimate the assessee's income on the basis of material available with him. The AO rejected books result and made additions on estimation. Once the books of rejected are rejected then profit has to be estimated on the basis of available material. [Dabros Industries Company (P) Ltd Vs CIT (1977) 108 ITR 424 (Cal), Navneet R Jhanwar Vs ITO (2004) 1 SOT 541 and ITO Vs Kundanmal Surana (2004) 3 SOT 632 followed] I hold that the Assessing Officer is justified in rejecting the book results and finalizing the assessment u/s. 144. The AO estimated the profit @2% of the turn-over. Even though the AR argued that as far as trading in cotton is....