Tribunal rules in favor of assessee, rejects revenue's appeal on unjustified additions and book rejection.

The Tribunal allowed the assessee's appeals for all assessment years, dismissing the revenue's appeals. It found the rejection of books of account and additions under Section 153A unjustified, emphasizing the requirement for incriminating material in unabated assessments. The Tribunal deemed the AO's grounds for rejecting the books and estimating additions insufficient, leading to the dismissal of the revenue's appeals.

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Issues Involved:
1. Rejection of books of account under Section 145(3) r.w.s. 144 of the I.T. Act.
2. Additions made under Section 153A without new incriminating material.
3. Partial confirmation of additions on account of alleged bogus purchases.

Summary:

Issue 1: Rejection of Books of Account

The assessee challenged the rejection of its books of account by the Assessing Officer (AO) under Section 145(3) of the Income Tax Act, 1961. The AO noted discrepancies in the inward register for purchases from six companies and suspected the genuineness of these purchases. The AO rejected the books of account and estimated an addition of 18% on the alleged bogus purchases. The CIT(A) upheld the rejection of books but reduced the addition to 5%. The Tribunal found that the AO did not provide sufficient grounds for rejecting the books, noting that the sales were not disputed, proper stock registers were maintained, and no discrepancies were found during the search. The Tribunal disapproved the rejection of the books of account and allowed the assessee's appeal on this issue.

Issue 2: Additions under Section 153A

The assessee argued that no incriminating material was found during the search for the assessment years 2010-11 and 2011-12, which were already completed. The Tribunal agreed, citing the settled law that no addition can be made in unabated assessments under Section 153A in the absence of incriminating material. The Tribunal referred to the jurisdictional High Court's decision in PCIT Vs. Saumya Construction (P) Ltd. and the Supreme Court's decision in PCIT Vs. Abhisar Buildwell P Ltd., setting aside the additions for these years.

Issue 3: Partial Confirmation of Additions

For the assessment years 2012-13 to 2014-15, the CIT(A) had reduced the addition on alleged bogus purchases from 18% to 5%. The Tribunal noted that the AO did not dispute the sales, and the purchases were recorded in the books, with payments made through account payee cheques. The Tribunal found no basis for the AO's estimation and disallowed the addition. The Tribunal allowed the assessee's appeal and dismissed the revenue's appeal on this issue.

Conclusion:

The Tribunal allowed the assessee's appeals for all the assessment years and dismissed the revenue's appeals, concluding that the rejection of books of account and the additions made under Section 153A were not justified. The Tribunal emphasized the need for incriminating material to make additions in unabated assessments and found the AO's basis for rejecting the books and estimating additions to be insufficient.

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