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TMI Blog2018 (9) TMI 1692X X X X Extracts X X X X X X X X Extracts X X X X ..... ot find any merit in the additions / disallowances made by the Assessing Officer. Provisions for bad and doubtful debts disallowance - Held that:- We find that the Assessing Officer has disallowed the same because he was of the opinion that the provisions for bad debts is not allowable. When the matter was agitated before the first appellate authority the First Appellate Authority confirmed the disallowance made by the Assessing Officer stating that the claim of bad debts is not in accordance with the provision of section 36 (2) of the IT Act and therefore cannot be allowed. Both the lower authorities have grossly erred in not appreciating the facts in true perspective. Both the lower authorities have ignored the fact that the asset s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther income of ₹ 55.87 lacs. During the course of the scrutiny assessment proceedings the Assessing Officer noticed that there is decline in the profit ratio when compared with that of earlier years. The Assessing Officer observed that in A. Y. 207-08 the N. P. rate was 6.27% which declined to 5.17 % in A. Y. 2008-09 and further declined to 3.95% during the year under consideration. The Assessing Officer was of the opinion that the book results are not liable and accordingly proceeded by rejecting the books of accounts. The net profit was estimated at 6.5% which resulted into an addition of ₹ 4.07 crores. After estimating the net profit the Assessing Officer further made addition on account of provision for bad and doubtful debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onwards which can be seen from the fact in A. Y. 2007-08 net profit rate was 6.27% which dropped down to 5.17% in A. Y. 2008-09 and further came down to 3.95% during the year under consideration. Thus, the fall in net profit rate cannot be brushed aside lightly. However, we find that the estimation of profit at 5.2% is from reasonable on the facts of the case and should meet the ends of justice. We, therefore, do not find any error or infirmity in the findings of the CIT(A) so far as the estimation of profit is concerned. However, in our considered opinion once net profit is estimated as a percentage of sales no further disallowances should be made in the profit and loss account. Since we have confirmed the estimation of net profit, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed. ITA No.1974/Del/2018 A. Y. 2012-13 12. Facts on record show that in the year under consideration the nature of business of the assessee remained the same as it was in A. Y. 2009-10 (supra). For similar reasons the books of accounts were rejected by the Assessing Officer but in this year the Assessing Officer has disallowed 10% of the expenses which were confirmed by the first appellate authority. 13. In our understanding of the facts when profit has been estimated in earlier year after rejecting the books of accounts we do not find any reason why the same should not be done for the year under the consideration also. Since, the CIT(A) has estimated 5.2% in A. Y. 2009-10 and the order of the CIT(A) has been accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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