The Cuttack Bench of Income Tax Appellate Tribunal has held that no estimation of gross profit without rejection of books of account u/s 145(3).
The assessing officer made an addition to the total income of the assessee, Smt B. Sujata Subudhi, representing estimation of gross profit on account of non-availability of stock register. Aggrieved assessee appealed before first appellate authority, which deleted the impugned addition.
The revenue filed appeal against the deletion of addition representing estimation of gross profit on account of non-availability of stock register before ITAT.
The counsel for the revenue submitted that in the course of assessment proceedings, AO had called for stock register of the assessee, which was not produced. In the absence of stock register, the AO had made reasonable estimation of the gross profit in respect of various trades undertaken by the assessee. The counsel for the revenue prayed for the reversal of order of CIT (A).
The counsel for the assessee submitted that as the books of account have not rejected, hence, the estimation of gross profit is not permissible.
The Coram of Mr. George Mathan, Judicial Member and Mr. Arun Khodpia, Accountant Member has held that “the assessment order clearly shows that the provisions of section 145 (3) have not been invoked and the books of account of the assessee have not been rejected. This being so, admittedly, estimation of the assessee’s income is not permissible. In these circumstances, we find no reason to interfere with the order of the ld CIT(A)”.
Mr. Braja Kishore Mohapatra appeared for assessee and Mr. J. K. Lenka appeared for revenue.
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