TaxTMI 
TaxTMI 
2017 (2) TMI 1516
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....f Rs.45,68,625/- added by the AO on account of estimation of GP. 3. In response of notice of hearing none has come present on behalf of the assessee. With the assistance of the ld.DR, we have gone through the record carefully and proceed to decide the appeal ex parte qua the assessee. 4. Brief facts of the case are that the assessee at the relevant time was engaged in trading of iron scrap. She has filed her return of income on 30.9.009 declaring total income at Rs.2,49,092/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 20.8.2010 which was duly served through registered post. Thereafter, the ld.AO has issued various notices, but the assessee did not submit requisite detai....
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....arbitrarily at 20%. In view of the above, it is held that the rejection of book of accounts by the AO is not as per law and accordingly the addition also cannot be sustained." 6. We have heard the ld.DR and gone through the record carefully. Section 145 of the Income Tax Act is the relevant provision for this issue, therefore, it is pertinent to take 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 ....
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....to deduce the true income. On the basis of method of accountancy followed by an Assessee than he can reject the book result and the assessee's income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee 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. 8. For exercising the best judgment, section 144 of the Income Tax Act provide the guidance to the ld.AO. This secti....
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.... the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]" 9. It is pertinent to note that that section 144 would suggest that in order to estimate income, learned Assessing Officer has to exercise his discretion which should be in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment asse....