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2017 (12) TMI 1252 - ITAT JAIPURRejection of books of accounts - Unverifiable purchases - bogus transactions - Most of the purchases of the assessee were from persons/ concerns issuing bills without delivery of goods - Held that:-books of accounts are rejected by the AO the only course of action left to the AO is to assess the income of the assessee on the basis of best judgment and GP rate is considered as proper and reasonable basis and guidance for the best judgment. Once, the books result are rejected the Assessing Officer cannot proceed to make an addition to the income offered by the assessee as per books result. However, the AO in the case of the assessee instead of applying the GP rate made on addition@ 25% of the purchases to the book results. This act of the Assessing officer itself contradicts the decision of rejecting the books of accounts and books result. AO not given any finding of inflated purchases by the assessee but doubted the very transaction of purchases due to non production of these parties before the AO. The AO has not given the finding that the prices of the goods was inflated by the assessee but the AO doubted the genuineness of the purchases on the ground that the suppliers were found to be accommodation entries providers. When the AO rejected the book results u/s 145(3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgment instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee’s own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the ld. CIT(A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substance or merits. Trading addition - Held that:- AO issued summons to the parties from whom the assessee made the purchases however, there was no response and no compliance of the notice issued by the AO to these parties. Thus, the Assessing officer has rightly pointed out that the sale to the extent of more than 60% of the assessee was not verifiable. Therefore, in these facts and circumstances of the case when the sales of the assessee to the extent of more than 60% is not verifiable due to the failure of the assessee to produce the relevant evidence and the supplier then the book results of the assessee would not reflected true picture and consequently it was a sufficient and proper ground for rejection of books of accounts by the AO.
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