Sahyog Construction Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that once the books of accounts stood rejected under section 145(3) of the Income Tax Act and profits estimated, there cannot be addition on account of unexplained cash credit u/s. 68. Accordingly, appeal allowed.
Facts- The solitary issue raised in the above grounds relates to addition made to the income of the assessee u/s.68 of the Act amounting to Rs.6,58,43,000/- being unexplained cash credit. The orders of the authorities below reveal that due to the non-cooperative attitude of the assessee during assessment proceedings and on account of his failure to furnish necessary details called for verifying the gross profit shown by the assessee @ 17.95% on its turnover of Rs.5.18 Crores, AO proceeded to reject the books of accounts of the assessee and, thereafter, applied the GP rate of 19% on the total turnover resulting in addition of Rs.5,46,500/- being made to the income of the assessee. AO also made addition on account of unsecured loans taken by the assessee during the year amounting to Rs.6,58,43,000/- on account of the genuineness of the same not being established before him.
Conclusion- Hon’ble Punjab & Haryana High Court in the case of Kumar Trading Company vs. CIT, [2010] 2 taxmann.com268 (P&H) reiterated the said proposition rejecting the assessee’s contention that where books of accounts stood rejected and profits estimated the same could not be relied upon for making addition on account of any credit entries recorded therein remaining unexplained.
