TaxTMI 
TaxTMI 
2018 (6) TMI 1181
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....d-5(3)(4), Mumbai [AO] u/s 143(3) of the Income Tax Act,1961 on 08/03/2013. The grounds raised in the appeal reads as under: - 1(a). "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in directing to adopt the GP of 0.05% in place of the 4.39% adopted by the Assessing Officer. 1(b). "On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that the assessee failed to furnish the details in the course of the assessment proceedings to establish the correctness of the purchase & sale transactions and the valuation of the closing stock." 1(c). "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in relying on the five comparable cases furnish by the assessee without....
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....ssessee on the basis of weight in carats, these details could not be obtained. However, Ld. AO noted that such qualitative details were available in majority of purchase invoices and therefore, the submissions were not bona fide. It was further noted that the purchase price of imported diamonds ranged from $28 to $9400 which clearly reveal that diamonds of varied quality were being dealt by the assessee and therefore, the assessee was required to maintain adequate qualitative as well as qualitative details thereof so as to arrive at the correct profit figures. The aforesaid factual matrix led the Ld. AO to reject the books of accounts u/s 145 and at the same time, the Gross profit of the assessee was estimated @4.39%, being average of profi....
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....he AO is that quantitative and qualitative details were not given. The learned AR has submitted that quantity details were already submitted during assessment proceedings on 28.01.2013 in the form of stock register extracts. With regard to quality the appellant's objection was that it is not possible to maintain quality details in their line of trade and no other traders also maintained such details. When the books are audited under section 44AB and no defects were found in the books, the rejection of books only because of non-maintenance of quality details is not proper. The Honourable ITAT Ahemedabad in the case of Nevil Gems(supra) has come to the conclusion that books cannot be simply rejected because the quality details were not suppli....
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....t is proved that the purchases were made at a higher rate or sales were made at a lower rate than the market rates. Since AO has not noticed any such irregularity the objection of the AO is unacceptable in the present context. 4.2.3 Keeping in view all the facts in mind and respectfully following the above decisions and the legal position I hold that the rejection of books under section 145 is not proper. However, since the appellant while submitting the average working of GP on the basis of its five comparables it has arrived at an average GP of 0.05% and it is seen that the GP declared by the appellant at 0.03% is still less. In true spirit, I hereby direct the AO to rework the GP and adopt the average GP of 0.05% for assessment purpos....
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....der various laws. The books were subjected to Audit under Income Tax Act as well as under The Companies Act. These audit reports are available on record and the same do not contain any serious adverse observations on the part of the auditors. The Tax Audit Report furnishes the quantitative details of the opening stock, purchases and closing stock. Therefore, Ld. AO, in our opinion, without pointing out any specific defects / deficiencies in the books, was not justified in rejecting the same merely because the assessee reflected low Gross Profit. Proceeding on the same analogy, estimating the profit merely on the basis of profit reflected by the comparables was not justified and therefore, the action of Ld. AO, to that extent, could not be s....