AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 748
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....al Faceless Appeal Centre (hereinafter referred to as "NFAC"), Delhi dated 23.11.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") and relates to Assessment Year (A.Y.) 2017-18. 2. The grounds raised by the assessee are as under: "1. The Ld. CIT(Appeals), National Faceless Appeal Centre (NFAC) has erred in law and in facts in making addition u/s. 68 of the Act, when the hooks of accounts are rejected by him. The action of the ld. CIT (A) in confirming the addition made by the Ld. AO u/s. 68 is illegal, unjustified, arbitrary and against the facts of the case. 2. Without prejudice to the Ground No. 1 above, The Ld. CIT (Appeals), NFAC has erred in law and in facts in confirm....
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....hereafter, applied the GP rate of 19% on the total turnover resulting in addition of Rs.5,46,500/- being made to the income of the assessee. The AO also made addition on account of unsecured loans taken by the assessee during the year amounting to Rs.6,58,43,000/- on account of the genuineness of the same not being established before him. 4. The matter was carried before the Ld. CIT(A) who confirmed all the additions made by the AO. 5. The assessee before us is aggrieved by the order of the AO confirming the addition made u/s.68 of the Act alone. The assessee had not challenged the rejection of the books of accounts and application of GP rate of 19% to its turnover before us. The argument made by the Ld. Counsel for the assessee befor....
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....68 of the Act amounting to Rs.6.58 Crores. This credit pertained to unsecured loans taken by the assessee during the year from various parties which are listed in Para 5 of the assessment order. It is an admitted fact that the books of accounts of the assessee were rejected by the AO and income assessed by estimating GP on the total turnover of the assessee. The contention of the Ld. Counsel for the assessee before us is that once books of accounts were rejected the same cannot be relied upon to make any addition or disallowance to the income of the assessee. In the facts of the present case, the addition u/s.68 of the Act is based on credits found in the books of accounts of the assessee pertaining to unsecured loan taken during the year a....
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....w: "Whether having regard to the fact that the Income-tax Officer has assessed the income on a percentage basis, he was justified in treating the said sums of Rs. 41,300 and Rs. 11,000 as profits from an undisclosed source ?" In the case for the assessment year 1947-48 the corresponding question was in identical terms except that the figures mentioned in it were Rs. 19.575 and Rs. 20,000. The High Court answered the question in the affirmative, and in our view rightly, for we do not think that any other answer is possible. We are in some difficulty in appreciating the point of this question also. The question would seem to suggest that because the income from a disclosed source has been computed on the ba....
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.... Hence the question whether income represented by an entry in the books of a business is income of that business or of another business would have to be decided on the facts which showed the business to which it belonged. But quite clearly the answer to that question would not depend on whether the income from the first mentioned business had been computed on the basis of a return filed or of an estimate of the income made by the taxing authorities. This, however, is what the question as framed suggests, and that suggestion is in our view wholly without foundation. Therefore, it cannot be said that the taxing authorities were precluded from treating the amounts of the credit entries as income from undisclosed sources simply be....
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....eceived from undisclosed sources was disputed only on the ground that the income from the business had been computed on the basis of an estimate. In the circumstances of the case we could not have done anything else." 9. This proposition was reiterated by the Hon'ble Apex Court in the case of CIT vs. Devi Prasad Vishwanath, [1969] 72 ITR 194 (SC). Further, Hon'ble Punjab & Haryana High Court in the case of Kumar Trading Company vs. CIT, [2010] 2 taxmann.com 268 (P&H) reiterated the said proposition rejecting the assessee's contention that where books of accounts stood rejected and profits estimated the same could not be relied upon for making addition on account of any credit entries recorded therein remaining unexplained. The Hon'ble Co....