2019 (11) TMI 1223

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..... rejection of Books of accounts and invoking of provisions of section 145(3) by ld. A.O. despite :- * Audited Books of accounts maintained on day to day basis were produced along with vouchers in the course of hearing. * All Bills/Vouchers/Documentary Evidences along with individual Trip Sheets were produced/submitted to Ld. A.O. on 6.12.2017 and other dates ( a fact incorporated in A.O's Order page No. 4 & 5) * Ld. AO's observations are based on mere conjectures & surmises and the acceptance of applicability of Section 145(3) is unjustified as not warranted from the unsubstantiated allegations. B. Ld. CIT (A)'s observation that no one attended the date of hearing is contrary to the facts as all the dates of hearings fixed were atte .....

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..... ed the income by applying net profit rate at 4% against the net profit declared by the assessee at 2.51% and thereby made a trading addition of Rs. 13,33,296/-. On appeal, the ld. CIT (A) has restricted the trading addition by adopting NP at 3.5% as against 4%. 3. Before the Tribunal, the ld. A/R of the assessee has submitted that the profit declared by the assessee for the year under consideration is in line with the past history of the assessee as well as in this trade. He has referred to the details of net profit declared by the assessee for the assessment years 2013-14, 14-15 and 15-16 and submitted that for the preceding two years the AO has accepted the income declared by the assessee and, therefore, the income/profit declared by the .....

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..... nstance. Therefore, ignoring the past history of the assessee and estimating the income based on NP at 4% without giving any basis as to how NP rate of 4% is reasonable and proper, the action of AO is contrary to the settled proposition of law. The power of estimation does not mean an arbitrary power with the AO but the estimation has to be on some reasonable and proper basis. The ld. CIT (A) though restricted the addition by applying 3.5% NP, however, there was no basis explained by the ld. CIT (A) for applying the NP at 3.5%. The comparative details of NP declared by the assessee for the preceding year as well as for the year under consideration are as under :- A.Y. Turnover NP before Interest on capital and remuneration to partners % .....

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