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It would be just and fair if the assessee ’s net profit is also restricted to 2.5 per cent as against 10 per cent applied by the AO and restricted to 5 per cent by the learned CIT(A).

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Sec. 145 of Income Tax Act, 1961 - Rejection of Accounts - The assessee is a Transport contractor, filed his return. The assessee’s accounts were audited. The AO observed that the freight payments were about 98 per cent of transportation receipts. On being called upon to substantiate the receipts of freight, the assessee furnished part details, with which the AO was not satisfied. Apart from that, the AO also found that certain expenses claimed by the assessee were not properly backed by necessary evidence. He rejected the books of accounts under s. 145 of the Act and applied net profit rate at 10 per cent, which led to estimation of business income at Rs. 18,16,578. The CIT(A) got partly convinced with the assessee and reduced the net profit rate to 5 per cent. Aggrieved thereby, the assessee filed appeal before ITAT. The assessee relied before the CIT(A) on a Jaipur Tribunal order dt. 5th June, 2015 in Shri Om Prakash Bansal Cuke vs. ITO (ITA No. 734/JP/2012), wherein the Tribunal restricted the estimation of income under such circumstances at 2.5 per cent. Considering the entirety of the facts and circumstances prevailing in the case of the assessee. Thus, relying upon the same, ITAT held that it would be just and fair if the assessee ’s net profit is also restricted to 2.5 per cent as against 10 per cent applied by the AO and restricted to 5 per cent by the CIT(A). Appeal of the assessee partly allowed.—RAJA JASPALSINGH BAGGA vs. ITO.[2020] 26 ITCD Online 033 (ITAT-PUNE)