TaxTMI 
TaxTMI 
2014 (6) TMI 839
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.... the outset, the Ld. D.R. submitted that books of account of the assessee were rejected as there was glaring discrepancies and in support, he read. the relevant para of the assessment order. He further submitted that Ld. CIT(A) has deleted the addition without contravening the finding of the Assessing Officer. 3. On the other hand, Ld. A.R. submitted that there was small difference of Rs.6.34 lacs in the accounts of the assessee vis-à-vis books of certain supplier parties. These differences were quite small as out of 252 parties, the Assessing Officer conducted inquiry in respect of only 17 parties and the difference was noted only in 5 parties. The Assessing Officer rejected the books of accounts and arbitrarily increased GP ratio ....
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....king the provisions of Section 145(3) of the Act. The provisions of Section 145(3) require that where the A.O. is not satisfied about the correctness and completeness of the accounts of the assessee where the method of accounting provided in sub section (1) of 145 or accounting standards as notified under Sub Section (2) of Section 145 have not been regularly followed by the assessee, the A.O. may make an assessment in the manner provided under Section 144. The provisions of Section 144 empower the assessing officer to make the assessment of total income to the best of his judgement after taking into account all relevant material gathered by him and after giving the assessee an opportunity of being heard. On perusal of the assessment order,....
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....rect or incomplete as to the extent of its impact on the profits of the appellant and the underlying reasons. The Ld. AO failed to appreciate that there are often minor rate differences between the supplier and the customer in the trade of the appellant and while the supplier may claim certain amount, the buyer may insist on some other amount or claim the discount or rate difference due to any defects in quality, etc. Such instances are common business practice and are periodically resolved as and when respective accounts are reconciled. After inquiry of 17 out of 252 parties, the Ld. Assessing Officer could zero in on five parties in respect of which the difference in transactions aggregated. Ld. AO did not appreciate that the aggregate of....
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....visions of section 144 require that before making the best judgement assessment, the A.O. shall take into account all relevant material gathered by the A.O. and recompute the income to the best of his judgement. However, I find that the A.O. gathered no additional material that could help him recompute the income of the appellant. On the other hand, on the basis of five parties also, the turnover in relation to which is only a small fraction of appellant's gross turnover of Rs.50.3 crores, the effect of difference on confirmation of account results in the appellant having booked lesser expenses in respect of these five parties compared to what was shown on confirmation from them. Thus, the very basis of rejection of books of accounts is....
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.... A.O. received the goods in the earlier years however, since the same was not as per the specifications of the appellant the purchases were also not booked in the F.Y.2006-07 and the goods were also not entered in the stock in F.Y.2006-07. The Ld. AR also argued that these goods were to be returned back to the supplier but got delayed and were brought in the books in the current year when the appellant later got an opportunity to use that material and accordingly, were booked as purchases and also as stock of the current year. 6.3 The appellant is a company and is required to follow mercantile system of accounting. There is no doubt that the above purchases from M/s Kithania Steels (P) Ltd. were made in 2006-07 and the goods were also rece....