TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 1122
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....maintained by the assessee, the correct quantum of production is not ascertainable, therefore, the true and fair profit of business cannot be verified, thus, the books of accounts deserves to be rejected u/s 145(3) of the Act and consequently deleting the addition of Rs. 1,92,31,781/- made on account of sales not reflected in the books of account on the suppressed production. 2. During hearing, the ld. counsel for the assessee, Shri Subhash S. Shetty along with Shri R. N. Vasani, claimed that the impugned issue is covered in favour of the assessee by the decision of the Tribunal dated 18/11/2015 (ITA No.6653 & 6570/Mum/2011) for A.Y. 2008-09. This factual matrix was consented to be correct by Shri M. Murli, ld. DR. 2.1. We have considered....
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....n and consequently the true and fair profit of business cannot be deducted, the books of accounts deserved to be rejected u/s.145(3) of the, I.T. Act which has also been endorsed by various courts". . 3. A perusal of the aforesaid Grounds reveal that the Revenue has raised the multiple Grounds of appeal but essentially the dispute relates to the action of the CIT(A) in deleting the addition of Rs. 2,70,46,846/- made by the Assessing Officer on account of undisclosed production. 4. In order to appreciate the rival aspects of the dispute, the following discussion is relevant. The assessee before us is a company incorporated under the provisions of Companies Act, 1956, and is inter-alia engaged in production and dealing in a variety of c....
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....#39; materials consumed. In the said background and considering the absence of any record of day-to-day item wise consumption/production, the Assessing Officer proceeded to reject the manufacturing account results depicted in the account books by invoking the provisions of section 145(3) of the Act. Once the book results were rejected, the Assessing Officer adopted production ratio of the month of March 2008, and proceeded to compute the likely quantity of finished goods produced during the year under consideration. This methodology resulted in an extra production of 2,52,609 kg. which was valued at Rs. 2,70,46,846/-. The aforesaid amount was added to the 'returned income on the ground that such extra production would have been sold out....
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....sessing Officer in order to' support the case of the Revenue. Such reasoning has already been detailed by us in para 4 of this order and is not being repeated for the sake of brevity. 8. On the other hand, the Ld. Representative appearing for the assessee, has relied upon the findings of the CIT(A) and also referred to the explanation furnished before the lower authorities, copies of Which have been placed in the Paper Book filed, in order to substantiate that there was no justification for' the Assessing Officer to have rejected the books of account u/s 145(3) of the Act. 9. We have carefully considered the rival submissions. In the present case, the controversy revolves around the invoking of section 145(3) of the Act by the....
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....no fall in the GP rate also. Secondly, it is noted from the assessment order that the* Assessing Officer has also referred to a fall in the net profit in the current year vis-avis the immediate preceding assessment year. On this aspect also, assessee had explained before the Assessing Officer vide communication dated 7.9.2010, a copy. of which is placed in the Paper Book at page 27 to*28, that due to abnormal increase in overhead expenses with respect to, depreciation, interest and loan etc, the net profit has declined vis-a-vis the preceding year, though there was no decline in the Gross Profit ratio. At page '54 of the Paper Book is placed a tabulation of the GP ratio and the NP ratio for four assessment years which shows that the GP ....
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....error on the part of the C"IT(A) in setting-aside the action of the Assessing Officer of invoking the provisions of section 145(3) of the Act. The "CIT(A) has, therefore, correctly" deleted the addition of Rs. 2,70,46,846/, which we hereby affirm. Thus, the appeal of the Revenue is dismissed." 2.2. If the aforesaid order is analyzed, we find that on identical issue in A.Y.2008-09, an elaborate discussion has been made by the Tribunal and after considering the factual matrix, it was concluded that for invoking the provision of section 145(3) of the act to reject the books of accounts, by the Assessing Officer, it can be done only when, the Assessing Officer is not satisfied with respect to the correctness of completeness of the accounts ma....