AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 1154
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....f the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for the Assessment Year (AY) 2017-18. 2. The grounds raised by the assessee are as under:- "1. The order passed by the Ld. CIT (A) is against law, equity & justice. 2. The Ld. CIT(A) has erred in law and on facts in upholding rejection of books of accounts in contravention to the provisions of Act. 3. The Ld. CIT (A) has erred in law and on facts in upholding addition made by the Ld. A.O. u/s 68 of the Act even after rejection books of accounts. 4. The Ld. CIT(A) has erred in law and on facts in upholding addition made by the Ld. A.O. u/s 68 of the Act of Rs. 4,12,67,000/- which appellant has shown sales income. 5. Th....
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....tter in appeal before the ld. CIT(A) who upheld the rejection of books of accounts as also the addition made u/s 68 of the Act of the cash deposits in the bank account of the assessee of Rs. 4,12,67,000/-. 5. Aggrieved by the order of the ld. CIT(A), the assessee has come up in appeal before the Tribunal raising the aforesaid grounds. 6. Ground Nos. 1 & 6 are general in nature and need no adjudication. 7. Ground No.2 raised by the assessee challenges the order of the ld. CIT(A) in upholding the action of the Assessing Officer in rejecting the books of the assessee in terms of the provisions of Section 145(3) of the Act. The arguments made by the ld. Counsel for the assessee before us was that in terms of the provisions of law in th....
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....in section 144." 8. Ld. Counsel for the assessee contended that for the purposes of rejecting the books of accounts of the assessee, the Assessing Officer has to consider whether the assessee has regularly employed a method of accounting, and if 'yes', whether the annual profits can be properly deduced from the method employed and whether the accounts are correctly maintained. 9. Having so pointed out the position of law with regard to the rejection of books, the ld. Counsel for the assessee pointed out that, in the facts of the present case, none of the conditions as required by law were satisfied for rejecting the books of accounts of the assessee. That despite all the books of accounts, vouchers and other documents being produc....
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....n this regard and this despite the fact that all the books of accounts and vouchers were placed before the Assessing Officer. That all Sales were backed with purchases made. That the Books of accounts reflected sufficient stock with the assessee for making the sales. And without doubting any specific entries made in the Books, the AO, he stated, rejected the Books of accounts of the assessee on generalized observations that too totally unsubstantiated. He, therefore, contended that the rejection of books of accounts by the Assessing Officer was not in accordance with law and needed to be set aside. 10. Ld. DR, though was unable to controvert the contention of the ld. Counsel for the assessee that the rejection of books of accounts was ba....
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.... own whims and fancies. He has to give basis for finding the Books unreliable and not capable of revealing the true financial picture of the assessee. Books of accounts can be rejected as unreliable if important transactions are omitted therefrom, or if proper particulars and vouchers are not forthcoming or there is an inherent lacuna in the system of accounting or where sales vouchers and stock registers were not maintained or where there were deficiencies and discrepancies in the books of accounts or where bogus purchases were recorded and opening and closing stock was not verifiable. As pointed out by the ld. Counsel for the assessee, in terms of provisions of Section 145(3) of the Act, the Assessing Officer is duty bound to find patent,....
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....ed all sales to be duly corroborated with corresponding purchases made of the same. All evidences relating to the purchase was also placed before the Assessing Officer. The assessee had also presented his stock register for examination before the Assessing Officer, but not a single document or evidence was examined or investigated by the Assessing Officer. Admittedly, no discrepancy in the books of accounts maintained by the assessee was pointed out before rejecting the books of accounts, and since it is settled law that the rejection of books of accounts can take place only when the books are found to be maintained in such a manner that true profits cannot be ascertained therefrom, for which it is necessary for the Revenue Authorities to p....