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2013 (9) TMI 744 - HC - Income TaxBest Judgment Assessment to reach different figure than figure given by the Assessee Held that - The books of account of the assessee were audited. Profit and loss account, balance sheet and audit report were filed. The A.O. rejected the books of account only on the ground that bills and vouchers were not produced before him. He did not care to find out as to why the audit report cannot be believed before making additions. The Tribunal has rightly relied upon the judgment of Rajasthan High Court in CIT v. Gotan Lime Khanij Udhyog, 2001 (7) TMI 19 - RAJASTHAN High Court , in which it was held that it is not necessary that on restoring to best judgment assessment the Assessing Authority must reach a different figure of income and profit. The assessee has adequately explained the Gross Profit rate and Net Profit rate by furnishing a comparative table.
Issues:
1. Application of Net Profit rate on estimated turnover 2. Deletion of amount added on account of sundry creditors 3. Addition of unsecured loans 4. Validity of findings by the Tribunal Analysis: Issue 1: Application of Net Profit rate on estimated turnover The appeal challenged the ITAT's decision regarding the application of the Net Profit rate on the estimated turnover disclosed by the Assessee for the assessment year 2007-08. The Tribunal upheld the order passed by the CIT (A) based on the progressive increase in turnover and gross profit over the years. The Tribunal found that the A.O. had no valid reason to reject the account books as they were audited, and the A.O. rejected the books only due to the absence of bills and vouchers. The Tribunal relied on a judgment of the Rajasthan High Court to support its decision, emphasizing that the Assessing Authority need not arrive at a different income figure in a best judgment assessment. The appellant provided a comparative table to explain the Gross Profit rate and Net Profit rate adequately. Issue 2: Deletion of amount added on account of sundry creditors Regarding the deletion of Rs.33,70,172 added by the A.O. on account of sundry creditors, both the CIT (A) and the Tribunal found that the books of account contained specific details of creditors, and the A.O. failed to identify any specific bogus party. Therefore, the deletion of this amount was justified based on the findings of the CIT (A) and the Tribunal. Issue 3: Addition of unsecured loans The Tribunal also addressed the addition of Rs.13,00,000 on account of unsecured loans. Both the CIT (A) and the Tribunal agreed that the Assessing Officer noted the loan from a Director of the company, and his creditworthiness was established through various financial details provided by the assessee. The Tribunal concluded that the burden of proving the creditworthiness of the depositor was discharged by the assessee, leading to the dismissal of this addition. Issue 4: Validity of Tribunal's findings The High Court examined the findings of the A.O., CIT (A), and the ITAT and concluded that the questions raised did not amount to substantial questions of law for consideration by the Court. The Court dismissed the income tax appeal based on the findings and decisions made by the lower authorities, indicating that no legal errors or substantial issues were identified that warranted further review. In conclusion, the High Court upheld the decisions of the lower authorities regarding the application of Net Profit rate, deletion of amounts related to sundry creditors, and addition of unsecured loans, finding no substantial questions of law to be addressed in the appeal.
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