2019 (7) TMI 642

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....stion sought to be urged was whether the ITAT was justified in affirming the order of the Commissioner of Income Tax (Appeals) [CIT (A)] in deleting the addition made by the Assessing Officer (AO) of Rs. 1,77,73,854/- by rejecting the books of accounts of the Assessee under Section 145 of the Act? 4. The Assessee has filed his return of income on 16th October, 2008 which was picked up for scrutiny and notice issued to him under Section 143 (2) by the AO along with a questionnaire. The assessment was completed by an order dated 29th December, 2011 under Section 143 (3) at an income of Rs. 2,52,96,070/- resulting in an addition of Rs. 1,77,73,854/- on account of revised gross profit (GP). According to the AO, the Assessee had inflated the ex....

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....s year. Accordingly, the so called artificial consumption of 9.67% was held not to be sustainable. The addition was accordingly deleted. 7. Aggrieved by the order of the CIT (A), the Revenue appealed to the ITAT which by the impugned order has dismissed the said appeal. The ITAT has, inter alia, noted that the Revenue accepted the books of accounts of the Assessee for the earlier and subsequent AYs i.e. 2007-08 and 2009-10, both in scrutiny assessments under Section 143 (3) of the Act, without making any additions of a similar nature. Even in AY 2010-11 AO accepted the book result of accounts of the Assessee as submitted, under Section 143(3) of the Act. It was in these circumstances ITAT observed that "instead of recasting the trading acc....

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....subsequent AYs, the Assessee's books of accounts were in fact accepted by the AO in scrutiny under Section 143 (3) of the Act without making any addition. He was unable to explain how this would be tenable particularly considering that it is inconceivable that the accounts of a particular AY are found unacceptable under Section 145 of the Act but not those of the immediately preceding or subsequent AYs. If accounts of a particular AY are found not reflecting the true state of affairs, they would undoubtedly impact the accounts for the immediately preceding or subsequent AY. In other words it is inconceivable that the accounts of one particular AY in isolation is rejected and not those of the immediately preceding or subsequent AY. While as ....