If books of Accounts are rejected than estimation of Income is justified

Meja Filling Station Vs DCIT (ITAT Allahabad)

Conclusion: Once the books of account of assessee were rejected for want of supporting vouchers and details then the income of assessee was required to be estimated thus, there were no error or illegality in the impugned order of CIT(A) in estimating the income of assessee by applying N.P. at 1% which was a reasonable and justified.

Held: Search and seizure action carried out u/s. 132 at the residential and business premises belonging to Vaishwya Group of cases. During the search and seizure action certain papers and documents belonging to assessee were found and seized from hotel Ajay International, Allahabad. Pursuant to search and seizure action, notice u/s. 153C was issued by the DCIT to assessee for the AYs 2005-06 to 2011-12. AO had framed the assessment u/s. 153C r.w.s. 153A and 143(3) for AYs 2005-06 to 2010-11 as well as u/s. 153B(1)(b) for the assessment year 2011-12. AO while completing the assessment had rejected the books of account of assessee and estimated the income by applying 2% N.P.  For the period 07.12.2007 to 31.03.2008 and the remaining AYs i.e., 2009-10 to 2011-12 AO made substantive assessment in the hands of assessee firm though the income was estimated by applying 2% of NP. It was held that alleged seized material had no relevance to the assessment for the year under consideration but once the books of account of assessee were rejected for want of supporting vouchers and details then the income of the assessee was required to be estimated. In view of the finding on estimation of the income for the AYs 2005-06 to 2007-08 there were no error or illegality in the impugned order of the CIT(A) in estimating the income of the assessee by applying N.P. at 1% which was a reasonable and justified.

FULL TEXT OF THE ORDER OF ITAT ALLAHABAD

These eight appeals by the assessee are directed against eight separate orders of ld. CIT(A)-III, Lucknow all dated 21.01.2019 arising from assessment orders passed u/s. 153C and 153B(1)(b) r.w.s. 143(3) for AYs. 2005-06 to 2011-12. There are two appeals for the Assessment year 2008-09 due to the reason that a new +partnership deed was executed in the said year and therefore, the Assessing Officer framed two assessment orders one for the period w.e.f. 01.04.2007 to 06.12.2007 and second from 07.12.2007 to 31.03 .2008.

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