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2014 (7) TMI 508 - AT - Income TaxRejection of books of account – Fall in the gross profit not explained – Held that:- The initial onus to explain and substantiate its accounts, which is only its’ evidence in support of its return of income (ROI), is on the assessee - It is not that the assessee had not explained the decline in its profit in any manner - The same being on account of a variety of factors impinging thereon, including market rates of various inputs and outputs, which are variable, could not possibly be explained to the last rupee - there is no finding that the decline in profit remains unsubstantiated or unexplained by the assessee - what is envisaged by law is a satisfaction, on an overall verification and examination of the accounts, of the same being not correct or complete and, thus, accordingly, not reliable for the purpose of computation of income under the said heads of income - no cause/s to have been located which could form the basis of the AO’s dissatisfaction with the assessee’s accounts in terms of section 145(3) - CIT(A) has thus rightly held that there was no warrant for the application of section 145(3) of the Act – Decided against Revenue. Disallowance of detention charges – Held that:- The documents of the clearing agent supplied in substantiation were however for the year 2005, and also did not match with the figures in respect of weight, name of ship, delivery point, etc. per the copies of the documents with regard to the purchase, as furnished by the assessee - The transaction appeared to be relating to financial year 2005-06 - The assessee being unable to substantiate its claim of having incurred the relevant expenditure wholly and exclusively for the purpose of its business, the same was disallowed - the assessee being unable to improve its case before the FAA – Decided partly in favour of Assessee.
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