2015 (1) TMI 879

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..... The appeal before the CIT (A) had been preferred by the respondent assessee impugning the order dated 31.12.2008 passed by the Assessing Officer rejecting the books of accounts under Section 145 of Income Tax Act, assessing the income for assessment year 2006-2007 at Rs. 42,19,790/- concluding, inter alia, as under:- "i. During the examination of the books of accounts, it was noticed that the cash book maintained by the assessee is incomplete and not maintained as per the accounting system; ii. The cash book doesn't show the position of opening cash available with the assessee on a particular day and similarly at the end of a particular day/date. iii. In the cash book the sale made by the assessee is not properly recorded and als....

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....ng rejected the books of accounts under Section 145 of the Income Tax Act. 6. For purposes of consideration of the challenge to the impugned order in this appeal, all that we need to take note of is the fact that the Assessing Officer had made the best judgment assessment under Section 144 of the Income Tax Act, after rejecting the books of accounts under Section 145, on the basis of observations summarized as under:- "i) There was no available cash on different dates, taking into account cash sales. This finding was based on the assumption that there was no opening cash balance with the appellant. ii) The appellant does not maintain stock register." 7. The CIT (A) deleted the addition on the basis of rate of gross profit applie....

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....did have excessive stock which was not reflected in the books. In the absence of this, the mere finding that the appellant did not maintain stock register, cannot be used to reject the books without having commented about the correctness or completeness of the accounts or without drawing any adverse finding about the method of accounting or notified accounting standards. In view of this, I do not find that the ld AO was judicious and on sound grounds to reject the books of accounts of the appellant. The appellant has shown G.P. of 14.49%, which is slightly better than that for the immediately preceding previous year. In view of this, there is no ground for making any addition to the trading account of the appellant. The addition made by the....