2019 (7) TMI 1154

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....d and accepted rate, is justified. 2. The facts are that the assessee carries on business as a dealer of Tata Motors; it also carries on after sale service of heavy equipment and machinery. The record would show that the Assessing Officer sent several notices (12) under Section 143 (2) and 142 (1) of the Income Tax Act, which were not complied with. Eventually, based upon the materials before him, the AO rejected the books of accounts. While doing so, the AO noticed that the statutory auditors certificate under Section 44AB had certified that the documents and the books were in order and had been properly audited. Yet, it was noticed that the assessee had not maintained Stock Register. The AO, therefore, proceeded to verify the material ....

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.... stock register and quantitative tally, it is seen that the appellant deals in spare part of machinery the volume of which is numerous and it is not a case of the A.O. that the valuation of closing stock made by the appellant is not in accordance with the method provided under the law. Mere non maintenance of stock register cannot be made a basis for rejection of books of account because before invoking the provisions of section 145(3) of the I.T. Act the A.O. is bound to prove that the books of account maintained by the appellant is not reflecting the correct income and therefore it is not possible to assess the correct income of the appellant. In view of above discussions and the defects pointed out by the A.O. have been reconciled by the....