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TMI Blog2012 (9) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... rting the goods - The assessee did not file reply to the queries or documents asked for by the AO - The books of account and bills and vouchers were also not produced - AO rejected the books of account and estimated the net profit @ 8% of total receipts – Held that:- Once the books of account are rejected and profit is estimated, there is no reason to make further disallowance of any of the expenditure. Where profit is assessed on estimated basis by applying net profit rate, the expenses are deemed to be considered and no further deduction is to be allowed or disallowed. Appeal decides in favour of assessee - I.T.A.No. 37/Ind/2012 - - - Dated:- 2-7-2012 - SHRI JOGINDER SINGH AND SHRI R.C.SHARMA, JJ. Assessee by : Shri Hit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uchers were also not produced. Hence the Assessing Officer rejected the books of account and estimated the net profit @ 8% of total receipts and made an addition of Rs. 20,06,458/-. 3. By the impugned order, the ld. CIT(A) had given part relief by upholding disallowance of 40 % expenditure claimed in the profit and loss account. Following was the precise observation of the CIT(A):- It is found that the assessee did not have any reasonable cause for not producing books of account and vouchers and other documents as asked for by the Assessing Officer. Hence, the rejection of books of account is held to be valid. The Assessing Officer has made estimation @ 8% which is of total receipt which is not correct for the reason that the hire char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, he did not issue any notice to Shri Jitendra Singh for producing the books of account which was in his possession. As per ld. Authorized Representative , there was no payment of hire charges in excess of the prescribed limit, so as to warrant any disallowance u/s 194C and affidavit of auditor of the company dated 3.1.2012 was also placed on record, wherein it was stated that he had physically verified the books of account and after due verification, had reported under clause 27(a) of the said report that there was no requirement of TDS on hire charges paid since the same was paid to individual truck owners. However, on account of non production of books of account, the Assessing Officer disallowed entire payment of hire charges paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the facts discussed by the Assessing Officer, estimation a net profit rate at 8 % is justified. Once the books of account are rejected and profit is estimated, there is no reason to make further disallowance of any of the expenditure. Hon'ble Jurisdictional High Court in the case of Purshottamlal Tamrakar, 270 ITR 314, observed that where profit is assessed on estimated basis by applying net profit rate, the expenses are deemed to be considered and no further deduction is to be allowed or disallowed. Hon'ble Hyderabad Bench in the case of Teja Construction 129 TTJ 57, held that after rejecting the books of account and estimating profit, it would be like punishing the assessee if any further disallowance is made u/s 40a(ia). 7. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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