TaxTMI 
TaxTMI 
2026 (1) TMI 974
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....d 08.09.2025 passed for A.Y. 2018-19. 2. The assessee has raised the following grounds of appeal: "1. Ld. CIT(A) has erred in upholding the addition of AO of Rs. 48,67,190/- by rejecting books of accounts of assessee company without pointing out any discrepancy and thereby erred estimating Gross Profit of the assessee company to 11% from 8.5% already offered by the assessee. 2. The appellant craves to leave, add, alter, modify and/or withdraw any grounds of appeal either before or during the course of the hearing." 3. The brief facts of the case are that the assessee is a partnership firm engaged in the business of job-work of fabric processing. For the Assessment Year 2018-19, the assessee filed its return of income....
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....- as against Rs. 1,66,17,775/- declared by the assessee. The difference of Rs. 48,67,190/- was added to the income of the assessee. Consequently, the assessed income was determined at a loss of Rs. 23,60,605/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The principal ground of appeal raised by the assessee was against the rejection of books of accounts and the consequential addition of Rs. 48,67,190/- on account of estimation of gross profit. Before the CIT(Appeals), the assessee contended that the books of accounts were duly maintained and audited, and merely because item-wise and month-wise stock registers were not maintained, the books could not be rejected. ....
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....profit at 11% of turnover made by the Assessing Officer was fair and reasonable considering the facts and circumstances of the case. Finding no infirmity in the action of the Assessing Officer, the CIT(Appeals) confirmed the rejection of books of accounts as well as the addition of Rs. 48,67,190/- and dismissed the appeal filed by the assessee. 6. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 7. Before us, the Counsel for the assessee reiterated the arguments taken before CIT(Appeals) which is to the effect that the assessee had declared turnover of 19.5 crores, that the assessee was dealing with over 3,000 varieties of goods and therefore was not practically possib....
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.... a stock register of his products by weight and non-maintenance of such a stock register was by itself no ground to reject his accounts. The High Court further held that there was no need to have complete particulars of names and addresses of customers in case of cash transactions, and absence of such particulars in sale bills could not be a ground for not accepting books of account of an assessee. Therefore, since Tribunal neither found assessee's explanation in regard to low profits to be not true nor there was any finding that purchases had been exaggerated or sales had been suppressed, or that any transaction had not come into accounts Tribunal was not justified in rejecting assessee's accounts. 10. In Paramount Impex vs. Ass....
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....ld that the mere non- maintenance of stock register would not lead to the conclusion that profit of the Assessee could not be determined on the basis of the books of accounts maintained by it. 12. In the case of Fine Switchgears vs. Additional Commissioner of Income Tax [2017] 88 taxmann.com 779 (Amritsar - Trib.)/[2017] 185 TTJ 488 (Amritsar - Trib.)[02-11-2016], ITAT held that mere absence of stock register, where the fall in GP rate stands explained and where no specific defect has been pointed out, in the case of Ganesh Foundry v. ITO [2000] 67 TTJ (Jd) 434 has been held not detrimental. The ITAT further observed that in the case of M. Durai Ravi v. CIT [1972] 83 ITR 484 (Ker), it has been held that non-maintenance of stock register ....
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....c defect has been pointed out in the books of accounts maintained by the assessee. There is no finding by the Assessing Officer that purchases were inflated, sales were suppressed, or that any transaction was found to be outside the books of accounts. The quantitative details in respect of major consumables such as firewood and colours and chemicals were furnished by the assessee and have not been shown to be incorrect. In such circumstances, rejection of books of accounts solely on the ground of non-maintenance of stock register, without pointing out any other infirmity, cannot be sustained. The Hon'ble Kerala High Court in the case of M. Durai Raj v. CIT has held that non-maintenance of a particular form of stock register, by itself, is n....