TaxTMI 
TaxTMI 
2014 (4) TMI 967
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....tracted for ready reference. "The appellant company, as informed was engaged in the business of manufacturing of MS Alloys Steels Casting including MS Ingots. The company was also engaged in trading of iron & steels and has earned commission income as well during the year. The return declaring Nil income was e-filed by the appellant on 13.10.2007 showing a loss of Rs.98,074/-. The appellant had paid tax u/s 115 JB on book profit of Rs.18,31,207/-. The return was processed u/s 143(1) on 23.7.2008 and subsequently the case was selected for scrutiny and notice u/s 143(2) was issued and served upon the appellant. During the eyar the appellant company had declared gross sales of Rs.35,09,16,339/- as against sale of Rs.13,70,05,966/- in t....
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....w material, manufacturing and sale of finished products. The method adopted by ;the assessee was a regularly employed method. The department must show other defects in the books of accounts maintained by the assessee and the defects must be such that it was not possible to determine the income properly. There is nothing on record to show that it was profitable for the assessee to manipulate the purchase/sale of goods with sister concern. 5.3.4. In view of the above, I hold that the action of the Assessing Officer of rejecting books of accounts is not justified on the facts of the case and legal pronouncement made from time to time. The ground no.2 relating to the rejection of books of accounts of the appellant is, therefore, allowed." ....
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....d that in fact the section does not apply to the assessee. He submits that the disallowance was made by the AO by applying the particular GP rate of 6%. Thus he submit that Ld. CIT (A) wrong in quantifying the disallowance u/s 40A(2)(b). He submits that once Sec. 40A(2)(b) does not come into play , then the issue of verification of transaction with the sister concern, on the basis of particulars furnished by the assessee does not arise. 7. After hearing the rival contentions we hold as follows: 8. The Ld. CIT(A) was right in holding that the rejections of books of accounts is not justified for the reasons given in para 5.3.3 of his order. As rightly pointed out by the Ld.CIT(A) , the AO has not pointed out any particular defect in the boo....
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....t the issue may be remanded to the file of AO for fresh adjudication. We note that now that the assessee has not come up in appeal against the addition of Rs 10,00,02,125/-. At the same time we also note that the Ld. CIT (A) has not confronted the AO with the details of transactions furnished by the assessee with the sister concern. Under the circumstances we are the considered opinion that in the interest of justice the issue should be set aside to the file of the AO for fresh verification. Hence the prayer of the Ld.D.R. is granted. 11. In the result the appeal of the Revenue is allowed for statistical purposes. 12. The cross objection is on the sustenance of disallowance on account of interest payment , made by the Ld.Commissioner of I....