TaxTMI 
TaxTMI 
2018 (9) TMI 1619
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....) by an order dated 31.12.2015 on total income of Rs. 1,56,21,540/- against the returned income of Rs. 67,37,480/-. The case was selected for scrutiny under CASS. During the assessment proceedings, the Assessing Officer (AO) found that the books of accounts, supporting bills and vouchers produced by the assessee reveal that the expenditure claimed by the assessee was mostly on self-made vouchers and supported by the various registers and not amenable for verification. Thus, the AO rejected the books of accounts and estimated the income @ 5% on the gross receipts, placing reliance on the judicial pronouncements of ITAT, Hyderabad and accordingly completed the assessment and estimated the net income of Rs. 1,53,78,085/-. Later on, the Ld. ....
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....ss of the outstanding trade creditors, and did not make any addition on account of trade creditors. Similarly, the AO verified the books of accounts and held that the expenses were not amenable for verification, hence, followed the decision of Hon'ble ITAT, Hyderabad and estimated the income at 5% on gross contract receipts. Once, the AO rejected the books of accounts and the income is estimated, no other addition required to be made since the income has to be computed as per section 29 and the expenditure mentioned in section 30 to 43D deemed to have been considered. Similarly, trade creditors are parts of the expenditure debited to the P&L account, hence, once the income is estimated, it is not permitted to make further addition on acc....
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....ers relied up on by the Ld.AR. The Ld.Pr.CIT has taken up the case for revision u/s 263 holding that the AO has not at all carried out any enquiry with regard to large expenses claimed in P&L account and large increase in the sundry creditors. The Ld.Pr.CIT also viewed that the estimation of income at 7% is generally accepted percentage in contract business. At the outset, there is no general application of a specific percentage of income for estimation of income in all contractors cases. The estimation of income depends upon the facts and circumstances of the each case. And the same cannot be made universal application. In the assessee's case, the AO adopted the income at 5% on gross contract receipts which is in consonance with the subseq....
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.... order for fresh enquiry on the same issue. For ready reference, we extract para No.15 of the order of the Tribunal which reads as under : "15. In the present case, the A.O has ignored the books of accounts and resorted to estimation of net profit. The moment, the A.O. has estimated the net profit, even though he had not specifically mentioned that the books of accounts are rejected, it is presumed that the A.O. has rejected books of accounts before estimating net profit from the business. Once, the books of accounts are rejected and profit is estimated, then the CIT was erred inreferring to the same books of accounts to direct the AO to conduct further enquiries on few issues is not justified. Therefore, we are of the view that on....