During the assessment proceedings, the AO rejected the books of account and estimated the net profit. However, while computing the tax liability, the AO also made an addition under section 43B, which allows deductions only on actual payment, and accordingly passed the assessment order under section 143(3). The CIT(A) held that once the income under the head Profits and Gains of Business or Profession is estimated after rejection of the books of account, it is to be presumed that all provisions contained in sections 29 to 43D have been taken into account, and therefore no further disallowance under section 43B could be made. The High Court affirmed this principle and held that, where the gross profit is estimated after rejection of the books, restoring the matter to the AO for further verification was unnecessary and unwarranted. It was reiterated that once profits are determined on an estimated basis, the AO cannot rely on the rejected books of account to make further disallowances. Accordingly, no interference was called for with the order of the Tribunal. (AY.2012-13)