2018 (2) TMI 1212

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....ture. In brief grievance of the assessee is that the ld.CIT(A)has erred in confirming addition of Rs. 9,61,133/-. 3. Brief facts of the case are that the assessee-firm has filed its return of income on 3.9.2011 declaring total income at Rs. 8,16,431/-. The assessee at the relevant time was engaged in the business of trading in cotton bails and seeds. It has achieved turnover of Rs. 19.56 crores and disclosed a net profit at 0.42% which is far less in comparison to 0.91% and 1.26% achieved in Asstt.Year 2010-11 and 2009-10 respectively. Hence, the AO investigated accounts of the assessee. The ld.AO highlighted various discrepancies, and thereafter he rejected book results, estimated net profit at 0.91% which worked out Rs. 17,80,750/-. He....

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....ke note of this section. It reads as under : "145. (1) Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time [accounting standards] to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) [or accounting standards as....

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.... qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. Thus, the case of law of ld.counsel are of no help. 7. During the course of assessment proceedings, the ld.AO has noticed various discrepancies. These have been tabulated by the ld.cousnel for the assessee. They read as under: Sr. No. Ground Raised by Assessing Officer Contention of C1T (Appeals) while passing the order 1 Reduction in Gross Profit and Net Profit Margin as compared to previous financial year. No Comment of CIT(A) in his order. Refer Para 2....