|CORAM:||Bhavnesh Saini (JM), T. R. Sood (AM)|
|CATCH WORDS:||Best Judgement assessment|
|COUNSEL:||N. K. Sahi|
|DATE:||August 12, 2015 (Date of pronouncement)|
|DATE:||August 13, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 144: If books are rejected and Gross Profit rate is estimated, separate disallowance of expenses cannot be made|
The pattern of assessment under the IT Act is given by s.29/144 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in ss.30 to 43D. Sec. 40 provides for certain disallowance in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under s.29 is to be made under s. 145 on the basis of the books regularly maintained by the assessee. If those books are not correct or complete, the ITO may reject those books and estimate the income to the best of his judgement. When such an estimate is made it is in substitution of the income that is to be computed under s. 29. In other words, all the deductions which are referred to under s. 29 are deemed to have been taken into account while making such an estimate. This will also that the embargo placed in s. 40 also taken into account (Indwell Constructions vs. Commissioner of Income Tax (1998) 232 ITR 776 (AP) followed).