In case of rejection of books only AO can made addition only by way of Income estimation

Dy. CIT Vs Sree Nagendra Constructions & Ors. (ITAT Hyderabad)

Where there is estimation of business income, disallowance and consequential addition of revenue expenditure is not sustainable, as held by the jurisdictional High Court in the case of Indwell Constructions v. CIT (1998) 232 ITR 776 (AP-HC). In view of the same, we agree with the view of the Commissioner (Appeals) that this issue is also squarely covered by the decision of the jurisdictional High Court in the case of Indwell Constructions (supra), wherein it has been categorically held that where business income of an assessee is estimated, no other disallowance may be made. In the case of MA Highways, Commissionered supra, as well, the Tribunal has taken into consideration the decision of the jurisdictional High Court and held that no separate disallowance of expenditure shall be made once income is determined by resorting to estimation. Respectfully following the same, we do not see any reason to interfere with the orders of the Commissioner (Appeals).

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

ITA No. 202/Hyd/2015 is the appeal filed by M/s. Sree Nagendra Constructions for the assessment year 2011-12, while ITA No. 167/Hyd/2015 is the appeal filed by the Revenue against the relief granted to M/s. Sree Nagendra Constructions for the assessment year 2009-10. All the other appeals are cross appeals filed by the respective assessees as well as the Revenue for the assessment year 2011-12, against the orders of the Commissioner (Appeals), Hyderabad, dated 28-11-2014 respectively.

ITA No. 167/Hyd/2015-A.Y 2009-10

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