2015 (10) TMI 2807 - AT - Income Tax

Estimation of 25% profits on unverifiable purchases - HELD THAT - Both the parties agreed that the issue in question may be set aside to the file of the AO to decide the same afresh after the judgement rendered in the case of Anuj Kumar Varshney Others vs. ITO 2015 (4) TMI 533 - ITAT JAIPUR after giving the assessee a reasonable opportunity of being heard in accordance with law. Ground No. 2 of the assessee is allowed for statistical purposes. Disallowance of expenses - HELD THAT - We find merit in the arguments of the ld. DR that the assessee has neither denied the deficiency in the record in question nor has given any improvement in compliance of the record. In view of all these defects, there is no mitigating circumstance to disturb the estimate made by the AO. Assessee has not given any reason to suggest that the estimate is either arbitrary or unjustified. In view thereof, I see no infirmity in the order of the ld. CIT(A). Ground No. 4 of the assessee is dismissed.

Summary

Issues:
1. Rejection of books of account under section 145(3) of the Act
2. Estimation of profits on unverifiable purchases
3. Disallowance of certain expenses

Analysis:

Issue 1: Rejection of books of account under section 145(3) of the Act
The appellant raised the issue of the rejection of books of account under section 145(3) of the Act. However, during the hearing, the appellant did not press this ground, leading to its dismissal.

Issue 2: Estimation of profits on unverifiable purchases
Regarding the estimation of profits on unverifiable purchases, the appellant referred to a previous ITAT order and requested the matter to be set aside until a judgment by the Hon'ble Rajasthan High Court. Both parties agreed to this course of action, and the ITAT judge concurred, setting aside the issue for the AO to decide afresh post the High Court judgment.

Issue 3: Disallowance of certain expenses
The appellant contested the disallowance of various expenses, citing precedents from previous years where similar disallowances were restricted by the ITAT. The appellant sought a similar approach. The respondent argued that the disallowance was based on scientific grounds due to lack of supporting evidence. The judge upheld the disallowance, noting the appellant's failure to address deficiencies in record-keeping and compliance, finding no reason to disturb the AO's estimate. Consequently, the appeal on this issue was dismissed.

In conclusion, the appeal was partly allowed for statistical purposes, with different issues addressed and decided upon based on the arguments presented by both parties and the relevant legal provisions.