2011 (3) TMI 1739 - AT - Income Tax

Summary

Issues involved: Estimation of profits after rejection of books of account.

I.T.A.No.5927/M/09 (Revenue's appeal): The Revenue challenged the estimation of Gross Profit (GP) at 3% on tainted purchases, arguing that it should be 4.5% on the entire turnover. The Tribunal noted a similar issue in a previous case and upheld the estimation of profit at 3% for tainted purchases, deeming it fair and reasonable based on the specific circumstances. Consequently, the Tribunal dismissed the Revenue's appeal.

C.O.116/M/10 (Assessee's cross objection): The Assessee objected to the rejection of book profit and the estimation of GP at 3%. They argued that the rejection was unfounded as transactions were through proper banking channels and had quantitative tally. The Tribunal upheld the estimation of profit at 3% for tainted purchases, considering the low profit margin in the Assessee's line of business. Following the precedent set in a previous case, the Tribunal confirmed the action of the Commissioner of Income Tax (Appeals) and dismissed the Assessee's cross objection.

In conclusion, the Tribunal upheld the estimation of profit at 3% for tainted purchases, considering it fair and reasonable based on the specific circumstances of the case. Both the Revenue's appeal and the Assessee's cross objection were dismissed in light of the Tribunal's findings and the precedent set in a previous case.