TaxTMI 
TaxTMI 
2018 (9) TMI 145
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..... That the learned assesssing officer as well as commissioner of income tax (appeals) has erred in confirming the addition of Rs. 1,23,854/- on account of interest on income tax refund after rejection of books. 4. That the learned commissioner of income tax (appeals) has erred in confirming the ad-hoc disallowance on account of shop expenses of Rs. 48,000/-. 5. That the learned commissioner of income tax (appeals) has erred in confirming the ad-hoc disallowance on account of bardana expenses of Rs. 5,252/-. 6. That the learned commissioner of income tax (appeals) has erred in confirming the ad-hoc disallowance on account of nikasi expenses of Rs. 8,800/-." ITA No.704/Lkw/2016 1 That the learned commissioner of Income Tax (Appeals) has erred in confirming the rejection of books of account and making ad-hoc addition of Rs. 3,50,000/- gross profit without any basis. 2 That the learned assessing officer as well as commissioner of Income Tax (Appeals) has erred in confirming the ad-hoc disallowance and other addition after ad-hoc gross profit addition on account of rejection of books. 3 That the learned commissioner of Income Tax (Appeals) has erred in confirming the ....
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....ear was lower than the declared in the earlier year and in this respect our attention was invited to Para 2 of the assessment order. The Learned A.R. submitted that similar addition was made in the case of assessee itself in A.Y. 2012-13 and the Hon'ble Tribunal vide order dated 08.01.2018 in ITA No.338/Lkw/2016 had allowed the appeal of the assessee and in this respect our specific attention was invited to Para 13 of the order. The Learned A.R. submitted that in A.Y. 2012-13, the G.P. rate declared by the assessee was 11.59% against which the Assessing Officer had applied rate of 12.50%. It was further submitted that in the present year also the assessee had declared gross profit rate of 11.60% and the Assessing Officer had applied rate of 12.5%. It was submitted that no specific defect was pointed out in the books of account and therefore, also the disallowance was not warranted. Regarding ground nos. 2 and 3, the Learned A.R. submitted that these may be dismissed as not pressed. 6. The Learned D.R. submitted that the assessee had not produced sales register, stock register/sales bills and vouchers etc. and therefore, the Assessing Officer had applied higher rate of gross pr....
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....mitted that this modification of the net profit with reference to the provisions of Section 40(b) was justified and hence the question should be answered in the affirmative. 4. The pattern of assessment under the Income Tax Act is given by Section 29 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in Sections 30 to 43D. Section 40 provides for certain disallowances 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 asses-see. 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 the embargo placed in Section 40 is also taken into account. 5. No doubt there is a big difference ....
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....ss profit rate of 12.50% as against 11.59% declared by the assessee. The assessee vide Grounds No. 1 and 2 in A.Y. 2012-13 had agitated rejection of books of account and application of higher G.P. rate and the Hon'ble Tribunal had allowed Ground No.1 and 2 by holding as under: 9. We have perused the case record, heard the rival contentions and considered the judicial pronouncements placed before us. We find that cash book and ledger were produced by the assessee before the Assessing Officer and this fact is not disputed by the Department, as it is on record. All the purchase bills along with TCS certificates in support of purchases made by the assessee were also produced before the Assessing Officer. Day-to-day sales made and accounted for in the cash book at the end of the day were also before the Department and has placed before us in the paper book. 10. In the case of Hem Raj vs. ACIT (supra) also, assessee was engaged in the business of liquor and sales were done in cash. The Assessing Officer has rejected the books of account maintained by the assessee on the ground that assessee has not maintained dayto- day stock register and sales record. It was held by the Coordinate....