2019 (3) TMI 1814

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....ence, probabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in directing the learned A.O to estimate the gross profit at 14.09% as against 20% adopted by the learned A.O under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A] ought to have appreciated that the appellant has maintained the books of accounts which are audited u/s 44AB of the Act and produced before the learned A.O. in course of assessment proceedings and no defects have been found by the learned A.O. for rejecting the income reported by the appellant based the books of accounts maintained and consequently, the direction of the learned CIT[A] to estimate the income at 14.09% deserves to be vacated. ....

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....the assessee cannot sell the liquor with higher profit because of tough competition which forces the assessee to sell at low rate. From the assessment order, it is seen that there is no mention about rejection of books of accounts maintained by the assessee. Now in the light of these facts, we examine the applicability of Tribunal order cited by ld. AR of assessee. In this case also, as against GP rate of 12.61% shown by assessee, the AO adopted GP rate of 20% after making enquiries from KSBCL authorities. In Para no. 6 of this Tribunal order, the Tribunal held that if the AO made the estimation without rejecting the books of accounts, such an assessment is liable to be set aside. The Tribunal has followed the judgment of Hon'ble Karnat....

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....omplete. In our view, the laws commands us to set aside the assessment made on the basis of estimation, if the AO made the estimation without rejecting the books of account. In the matter of Anil Kumar (supra), the Hon'ble jurisdictional High Court has held as under : 11. In so far as the estimation of gross profit made by the Assessing Officer modified by the Commissioner of Income-tax (Appeals), the Tribunal has rightly held that when the books of account of the assessee had not been rejected and assessment having not been framed under section 144 of the Income-tax Act the said authorities were in error in resorting to an estimation of income and such exercise undertaken by them was not sustainable. Section 145(3) of the Act lays down t....