2018 (9) TMI 285 - AT - Income Tax

N.P. rate determination - rejection of books of accounts - non production of complete bills and vouchers - Held that - The assessee did not make any compliance to the query of the AO and the Ld. CIT(A). Therefore, the sole contention of the Ld. Counsel for the assessee that books are subject to audit would not help the assessee in any manner. Since the expenses were claimed of ₹ 2.61 crores against turnover of ₹ 3.61 crores and the same have not been subjected to production of complete bills and vouchers, therefore, the claim of the assessee cannot be allowed as such. The Authorities Below were therefore justified in applying NP rate of 5%. The addition was made of ₹ 11,78,847/- to the returned income of assessee is reasonable as against huge claim of expenditure. Considering the totality of the facts and circumstances, we do not find any justification to interfere in the orders of the authorities below, therefore, we dismiss the appeal of the assessee.

Summary

Issues:
- Addition of income
- Rejection of books of accounts
- Estimation of profit

Analysis:
- The appeal was filed against the order of the Ld. CIT(A) confirming the addition of income and the rejection of books of accounts. The assessee declared income of ?5,30,030 and was engaged in the business of fabrication of garments. The AO rejected the books of accounts due to non-production of required details and applied a net profit rate of 5%, resulting in an addition of ?11,78,847.
- The assessee contended that all expenses were entered into audited books, and the NP rate applied was unjustified. However, the Ld. CIT(A) upheld the rejection of books and estimation of NP rate at 5% as expenses were found inflated and unsupported by bills and vouchers. The appeal was dismissed.
- The Tribunal found no justification to interfere with the lower authorities' orders. The assessee failed to produce books of accounts and supporting documents, both before the AO and the Tribunal. The claim of expenses on repair and maintenance was not substantiated, and discrepancies were found in salary expenses documentation. The addition to income was deemed reasonable, and the appeal was dismissed.

This detailed analysis covers the issues of addition of income, rejection of books of accounts, and estimation of profit, providing a comprehensive overview of the judgment delivered by the Appellate Tribunal ITAT Delhi.