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Can AO Disallow Any Expenditure Separately Once Books Of Account Are Rejected?

QUERY: The assessment of builder cum contractor has been completed on estimated basis after rejecting his books of account. However, while completing the assessment, the Assessing Officer has made certain disallowances in respect of cash payments under section 40A(3) of the Act as well as under section 40(a)(ia) of the Act, whether disallowances are justified?
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In Teja Construction vs. ACIT [39 SOT 13] the Hyderabad Tribunal has observed as under:

“Once the books of account are rejected, income is estimated, the Assessing Officer precluded from invoking any other provisions of the Income-tax Act to make further addition.

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