ACIT Vs Vardha Infra Ltd. (ITAT Jodhpur)
ITAT Jodhpur held that if the books of accounts are rejected, and net profit is estimated by application of net profit rate, there cannot be again addition on account of any disallowance based on the same set of books of accounts. Thus, addition u/s. 40(a)(ia) set aside.
Facts- It was found that during the year, the assessee has itself disallowed a sum of Rs 13,87,72,635/- u/s 40(a)(ia) of the Income-tax Act, 1961. This shows that the assessee violated the provisions of Section 40(a)(ia) by not deducting tax on payment of Rs. 46,25,75,450/-. The books of accounts as well as ledger account of the parties and details of work carried out by them has not been furnished by the assessee. In absence of which, it is not clear whether such payment was actually made by the assessee for any type of work sublet or carried out by them. By disallowing 30% of the total expenditure of Rs. 46,25,75,450/-, the assessee had actually enhanced its expenditure by 70%, as the same might not have been incurred / paid by the assessee at all. Considering these facts as observed by the ld. AO it was evident that the book results declared by the assessee suffers from various defects and deserves to be rejected by invoking provisions of 145(3) of the Act. While holding so ld. AO also noted that in the immediately preceding i.e. A. Y. 2016-17 assessment was completed u/s 143(3) and on account of assessee’s failure to prove the authenticity of books of account, book results were rejected u/s 145(3) and NP rate of 7.23% was applied as against negative NP rate of 6.97% shown by the assessee-company.
