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2013 (11) TMI 471 - AT - Income TaxRejection of books of accounts u/s 145(3) of the Income Tax Act - Various expenditure claimed in trading account are not verifiable as expenses towards loading and unloading, labour charges & transportation are not found properly vouched and supported by proper bills & vouchers. The payments were made through self-made vouchers – Held that:- Department is bound by the assessee's choice of accounting regularly employed unless it can be said that the method of accounting followed by the assessee does riot reflect the true income. The AO after a careful scrutiny, came to the conclusion that the system of accounting employed by the assessee is consistent and regular and the ITO, therefore, is not entitled to interfere with the system of accounting followed by the assessee, unless it is possible for him to point out inherent defects in books of account and bring the case within the terms of s. 145 of the I. T. Act.– Decided against the Revenue. In the case of Sunil Siddharthbhai v. CIT [1985 (9) TMI 7 - SUPREME Court], it has been held that books of accounts for a businessman remains in the "Womb of future" – In the instant case, action of the Assessing Officer in invoking section 145(3) was not in accordance with law. The CIT(A) also examined enhancement made in turnover by the Assessing Officer and found that there was no justification in enhancing the turnover and applying arbitrary G.P. of 4% - Therefore, deleted the addition of Rs.23,63,115/- made by the Assessing Officer. Increase in G.P. rate by A.O.- G.P. rate increased from 3.30% to 4 % - Held that:- Enhanced the sale at Rs.22,02,584/- by applying G.P. rate of 4% - Assessing Officer before enhancement of sales has not given any queries and reason to the assessee. Though the assessee has submitted quantities and qualitative details, produced stock register, purchase and sale register and other related record. The enhancement of the sales is an arbitrary and not legal and regular. The Assessing Officer has not given any opportunity to the assessee to rebut the same and addition made by the Assessing Officer can not be sustained - The mere fact that there was a less rate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition – Decided against the Revenue. Disallowance of depreciation and vehicle expenses to 20% on the ground of personal use – Held that:- 5% disallowance on account of personal use will be reasonable - Therefore, restrict the disallowance to 5% instead of 20% made by the Assessing Officer.
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