2015 (5) TMI 998

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....ing the income after rejecting the book result of the assesse. 3. The brief facts of the case are that ssessee has filed its return of income on 24th September, 2008 declaring income of Rs. 7,00,260/-. The case of the assesse was selected for scrutiny assessment and a notice u/s. 143(2) was issued and served upon the assesse. On scrutiny of the account, it revealed to the Assessing Officer that assesse has been trading in grey cloth. It has shown total turn-over of Rs. 18.64 crores but the GP shown by the assesse is very meager i.e. at 0.20%. The assessing Officer has confronted the assesse, as to why its book result should not be rejected and the profit should not be estimated. The assesse has submitted details and contended that GP shown....

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....Ld. CIT(A) has deleted the addition by observing that assessing Officer failed to point out any defects in the books of account of the assesse, therefore he cannot estimate the GP. 5. Before us, LD. DR submitted that closing stock details were not maintained by the assessee. Therefore, it was not possible for the Assessing Officer to deduce true income from the account. He relied upon the order of the Assessing Officer. On the other hand, learned counsel of the assesse contended that assesse was not having any opening stock or closing stock, therefore, there cannot be any question to maintain the stock statement. It had booked order in bulk i.e. whenever it got an order it purchased the goods and supplied. He relied upon the order of CIT(A....

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....e with the method of accountancy employed by an assessee regularly subject to the sub-section (2) of section 145 of the Act. Sub-section (2) provides that the Central Government may notify in the Official Gazette from time to time the accounting standard required to be followed by any class of assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of accountancy followed by an assessee, i.e., cash or mercantile. Such method has to be followed keeping in view the accounting standard notified by the Central Government from time to time. Sub-clause (3) provides a situation, i.e., if the Assessing Officer is unable to deduce the true income on the basis of method of accountanc....