2019 (11) TMI 1223

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.... A. Ld. CIT (A) Ajmer has erred in confirming the rejection of Books of accounts and invoking of provisions of section 145(3) by ld. A.O. despite :- • Audited Books of accounts maintained on day to day basis were produced along with vouchers in the course of hearing. • All Bills/Vouchers/Documentary Evidences along with individual Trip Sheets were produced/submitted to Ld. A.O. on 6.12.2017 and other dates ( a fact incorporated in A.O's Order page No. 4 & 5) • Ld. AO's observations are based on mere conjectures & surmises and the acceptance of applicability of Section 145(3) is unjustified as not warranted from the unsubstantiated allegations. B. Ld. CIT (A)'s observation that no one atten....

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.... and consequently rejected the books by invoking the provisions of section 145(3) of the IT Act. The AO then estimated the income by applying net profit rate at 4% against the net profit declared by the assessee at 2.51% and thereby made a trading addition of Rs. 13,33,296/-. On appeal, the ld. CIT (A) has restricted the trading addition by adopting NP at 3.5% as against 4%. 3. Before the Tribunal, the ld. A/R of the assessee has submitted that the profit declared by the assessee for the year under consideration is in line with the past history of the assessee as well as in this trade. He has referred to the details of net profit declared by the assessee for the assessment years 2013-14, 14-15 and 15-16 and submitted that for the precedi....

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....f the assessee for the year under consideration. The AO has applied 4% net profit without citing any basis or comparable instance. Therefore, ignoring the past history of the assessee and estimating the income based on NP at 4% without giving any basis as to how NP rate of 4% is reasonable and proper, the action of AO is contrary to the settled proposition of law. The power of estimation does not mean an arbitrary power with the AO but the estimation has to be on some reasonable and proper basis. The ld. CIT (A) though restricted the addition by applying 3.5% NP, however, there was no basis explained by the ld. CIT (A) for applying the NP at 3.5%. The comparative details of NP declared by the assessee for the preceding year as well as for t....