2011 (8) TMI 1134 - AT - Income Tax

Summary

Issues involved: Appeal against orders of ld. CIT(A) for assessment years 2005-06 and 2006-07.

For A.Y. 2005-06:
The assessee appealed against the estimation of income by ld. CIT(A) at Rs. 11,36,584/- compared to declared income of Rs. 3,12,259/- applying a net profit rate of 5% instead of 1.37%.

The AO rejected the books of accounts due to lack of evidence for various expenses incurred in cash and applied a net profit rate of 7%, later reduced to 5% by ld. CIT(A).

In reference to similar cases, the Tribunal restricted the addition to Rs. 1.50 lacs considering the level of transportation receipts.

Regarding household expenses, ld. CIT(A) did not make a separate addition of Rs. 40,000/- as it was covered by the trading addition confirmed.

For A.Y. 2006-07:
The assessee challenged the income estimation at Rs. 4,75,366/- against declared income of Rs. 1,56,802/- applying a net profit rate of 5% instead of 1.64%.

Considering the findings for A.Y. 2005-06, the Tribunal restricted the trading addition to Rs. 75,000/- due to lower turnover.

No separate addition was made for inadequate withdrawals as it was already considered in estimating household expenses.

In conclusion, the appeals of the assessee were partly allowed, with the Tribunal pronouncing the order on 05-08-2011.