TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal upholds book rejection, reduces trading addition, and deletes expense disallowance.</h1> The Tribunal partly allowed the assessee's appeal by upholding the rejection of books of account under Section 145(3) and reducing the trading addition to ... Rejection of books of accounts - trading addition - Held that:- The gross profit rate of the assessee is better than preceding year and the turnover is also higher for the year under consideration. However, the assessee is not maintaining the proper books of account with regard to stock. Therefore, to plug the leakage of revenue, certain disallowance is inevitable as the opening stock, purchases & sales and closing stock of the assessee are not verifiable. Thus the lower authorities are justified in rejecting the books of account of the assessee by invoking the provisions of Section 145(3) of the Act but the addition sustained by the ld. CIT(A) to the extent of ₹ 2.00 lacs appears to be on higher side in the present facts and circumstances of the case and the same is sustained to the extent of ₹ 50,000/-. Thus the Ground of the assessee is partly allowed. Disallowance of expenditure - Held that:- When the books of account are rejected and trading addition are made, there is no justification in making further adhoc disallowance qua telephone and conveyance. This view is supported by ITAT in assessee's own case for preceding year. Thus we direct to delete the addition of ₹ 27,585/- (being 10% of the total claim) sustained by the ld. CIT(A). - Decided in favour of assessee Issues:1. Rejection of books of account under Section 145(3) of the Income Tax Act, 1961 and trading addition sustained.2. Disallowance of certain expenses and the percentage of disallowance.Issue 1: Rejection of Books of Account and Trading AdditionThe assessee appealed against the rejection of books of account under Section 145(3) and the sustained trading addition of Rs. 2,00,000. The Assessing Officer rejected the books due to the absence of stock register and qualitative details, despite a slight increase in gross profit rate. The history of higher gross profit rates in previous years also influenced this decision. The Authorised Representative argued against trading addition due to improved profit percentage but failed to justify the lack of proper stock records. The appellate authorities upheld the rejection of books under Section 145(3) and reduced the trading addition to Rs. 2,00,000 from Rs. 3,00,000. The Tribunal partly allowed the appeal, sustaining the trading addition at Rs. 2,00,000 instead of Rs. 3,00,000.Issue 2: Disallowance of ExpensesRegarding the disallowance of expenses like telephone, conveyance, repairs, car insurance, and car depreciation, the Assessing Officer disallowed 20% of the total expenses due to lack of proper vouching and personal elements. The first appellate authority reduced the disallowance to 10%. In a similar case from a previous year, the ITAT Jaipur Bench ruled against further ad hoc disallowance when books of account are rejected and trading additions are made. Following this precedent, the Tribunal allowed the appeal on this issue, deleting the addition of Rs. 27,585 (10% of total claim) sustained by the first appellate authority.In conclusion, the Tribunal partly allowed the assessee's appeal, sustaining the trading addition at Rs. 2,00,000 and deleting the additional expense disallowance of Rs. 27,585.
TaxTMI 
TaxTMI 
