TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 628
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.... "the Act") for AY 2017-18, dated 27.07.2023. 1.1 In this case, the assessee filed return of income on 01.12.2017 declaring total income of Rs. 2,67,29,330/-. The case was selected for scrutiny and the Ld. AO passed an order u/s 144 of the Act considering that he had to reject the books of accounts on the basis of several alleged discrepancies noticed by him in the same. He proceeded to add 1,44,27,000/- on account of cash sales, which were allegedly not verified from the books of account. Some relevant portions from the Ld. AO's order deserve to be extracted for reference: "The audit report as on 31.03.2017 relating to A.Y 2017-18 signed by the auditor on 30.09.2017 was submitted along with the return of income for A.Y. 2017-18. The cas....
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....awed. Firstly, the discrepancies found in the audit report cannot be sufficient ground for rejection of books as discrepancies ought to be brought out in the appellant's accounts and not merely in the audit report filed by the auditor. Further, the appellant had filed a revised audit report duly making the necessary corrections and the A.O had not pointed out any more discrepancies in the revised audit report. Secondly. whether interest expenses qualify as revenue or capital expenditure is a question of allowability of deduction of expenses from taxation point of view. It cannot be a defect found in the books from any stretch of imagination. Thirdly, the issue of increase in rent expenses as compared to earlier year is a matter of fact ....
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.... from cash sales and that they are duly recorded in the books of accounts, the onus is on him to substantiate the same with necessary evidences. However, no supporting documents have been submitted by the appellant to prove the nature and source of such cash deposits, Therefore, the above addition made by the A.O as appellant's income from other sources is sustained and ground of appeal No.6 is hereby dismissed." 1.3 Further, aggrieved with this action of Ld. CIT(A), the assessee is in appeal before the ITAT through the following grounds of appeal: "1. For that under the facts and circumstances of the case the order of the National Faceless Appeal Centre / Commissioner of Income Tax (Appeals)/ CIT (A) is contrary to law, facts and ci....
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....roper opportunity of personal hearing. 8. Fort that the NFAC/CIT(A) while quashing the order of the Assessing Authority on rejection of books of accounts u/s 145(3) of the Act, but at the same time has confirmed the addition on account of sales realization by cash for which the books has also been rejected by the Assessing Authority. 9. Without prejudice to the above, if any part of the sale consideration is treated as unexplained income, correspondingly the income offered for tax in the return of income should be reduced by that extent. 10. For that your petitioner craves leave to add, alter, modify, or delete any of the grounds at the time of hearing of the appeal or before." 2. Before us, the Ld. AR averred that the assessee is a ....
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....nt from the orders of authorities below that there is some doubt in this regard, considering the clear finding that the books of accounts were not produced. The Ld. DR also assailed the action of Ld. CIT(A) in the context of his disapproval of the ground as on which the book results were rejected. 4. We have carefully considered the documents before us, the orders of authorities below and the arguments of Ld. AR/DR. It is seen that in this case the discrepancy pointed out by Ld. AO as per the extracts from his order (supra) is fairly relevant and points towards a degree of oversight in terms of preparing the audit report. At this stage, it is not clear as to when and how the books of accounts were presented for examination and whether at a....