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TMI Blog2014 (12) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... and since the closing stock has been not properly ascertained by the assessee by physical verification etc., the rejection of book result cannot be faulted. It may be that the reasons for which the assessee could not maintain proper books is that the assessee was working under abnormal business conditions but then also, such improper books cannot be relied upon to assess the income of the assessee and for such a situation, the only course open is to reject the book result and estimate the income of the assessee. The Assessing Officer has adopted the net profit rate of 2.5% for estimating the income of the assessee at ₹ 7,50,112/-. AO also allowed deduction of ₹ 2.28 lac being admissible salary to partners. Adopting net profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Gorakhpur 5 MTC 289, I.T.A.T. Allahabad b) Dy. CIT Circle Bulandshahar vs. Allied Construction 105 ITD 1(SB), I.T.A.T. Delhi c) Sri Arvind Kumar Chaudhary vs. Dy CIT Gonda I.T.A. No.172/Lkw/10 3. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that the report of the special auditor u/s 142(2A) is already furnished and there is no adverse finding of the auditors also in this regard and therefore, rejection of books is not proper. 4. We have considered the rival submissions. We find that in the special audit report, these are some of the observations of the special auditor on page No. 5 6 of this report, which are reprod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e WIP is an approximation. It is also observed by the special auditor that they are not in a position to quantify the deviation to the revenue and balance sheet. In our considered opinion, correct figure of closing stock is very important for determining the income of the assessee and since the closing stock has been not properly ascertained by the assessee by physical verification etc., the rejection of book result cannot be faulted. The issue was decided by CIT(A) as per Para 4(7) of his order, which is reproduced below for the sake of ready reference:- 4(7) In view of the aforesaid discussion I find that the assessee maintained books of accounts in the regular course of business. The assessee maintained the books of accounts by adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit. It may be that the reasons for which the assessee could not maintain proper books is that the assessee was working under abnormal business conditions but then also, such improper books cannot be relied upon to assess the income of the assessee and for such a situation, the only course open is to reject the book result and estimate the income of the assessee. The Assessing Officer has adopted the net profit rate of 2.5% for estimating the income of the assessee at ₹ 7,50,112/-. The Assessing Officer also allowed deduction of ₹ 2.28 lac being admissible salary to partners. Adopting net profit rate of 2.28% is not excessive and it could not be shown by the assessee that the rate adopted by the Assessing Officer is exces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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