- (1.) The revenue has approached this Court by invoking the provisions of Section 260 A of the Income Tax Act, 1961 (hereinafter called "the Act") by challenging the order dated 18.10.2013 passed by the Income Tax Appellate Tribunal, Chandigarh Bench "B" Chandigarh in ITA No.356- Chandigarh-2013 in respect of assessment year 2009-10. It has been claimed that the following substantial questions of law would arise for determination of this Court:- "(i) In the facts and circumstances of the case, whether the ITAT was right in law in not sustaining the addition of Rs.85,45,077/- made on account of disallowance u/s 40A(3) of the Income Tax Act, 1961, even when the assessee has violated the provisions of Section 40A(3) and failed to furnish information and produce accounts (ii) In the facts and circumstances of the case, whether the ITAT was right in deleting the addition of Rs.85,45,077/- without appreciating the fact that there is no correlation between the estimated G.P.rate and the disallowance u/s 40A (3) (iii) In the facts and circumstances of the case, whether the ITAT was right in law in deleting the addition and not setting it aside to the file of the CIT(A) or the AO for ascertaining particular of specific default u/s 40A(3) without appreciating the fact that the AO had to make the addition u/s 40A(3) on the basis of cash withdrawal made by the assessee from his bank account for meeting business expenses on account of failure on the part of the assessee to furnish relevant information and accounts -
(2.) The facts deduced from the order of the Assessing Officer indicate that the assessee filed a return on 29.9.2009. The Assessing Officer processed the return under Section 143 of the Act and brought the case under scrutiny. Accordingly, the statutory notices as envisaged under the law, i.e., the notices under section 142 (1) and 143 (2) of the Act alongwith the questionnaire were issued and served upon the assessee. The assessee had declared the net profit of Rs. 7,46,920/- against the gross receipts of Rs. 1,47,09,566/- thereby giving the net profit rate of 5.05%. In response to the notices afore-mentioned, assessee filed objections. Besides various objections, the main objection of the assessee was that it had been maintaining the books of accounts as required under Section 44A of the Act which were duly audited under Section 44AB of the Act and the audited balance sheets, profit and loss account alongwith the annexures, the statement of particulars in Form No.3CD alongwith the copy of the account were also submitted in Assessment Proceedings.
(3.) The Assessing Officer rejected the books of accounts and estimated the income of the assessee by applying the net profit rate of 10% as against 5.05% declared by the assessee, thus, an addition on account of the low gross profit rate to the tune of Rs. 7,32,336/- was added and the net profit was calculated at Rs. 14,79,256/-.;