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2014 (12) TMI 882 - AT - Income TaxRejection of books of accounts - Estimation of income @ 2% of gross sales Disallowance of loss on products traded by assessee Held that:- No defect was pointed out by the AO in the books of account nor any fault was found with regard to quantity-wise details of purchases, sales opening and closing stock of inventory of various items dealt with, as filed before the AO - Stock was accounted for on FIFO basis and valuation of stock was done as per regular practice followed by the assessee over the years - in ITO V/s Girish M Mehta [2005 (2) TMI 494 - ITAT RAJKOT] it was held that while rejecting books of accounts the onus was on the revenue to prove that either the books of account maintained by the assessee were not correct and complete or the method of accounting adopted was such that the true profit could not be deduced therefrom - as the onus to make out a case for rejection of books of account was on the revenue, the assessee could not be burdened with the responsibility of proving a negative aspect of the matter meaning thereby the assessee could not be held responsible for not having earned profits at a particular rate. Merely because, the assessee was having low gross profit or loss in respect of its trading activities for which due reasons were given before the AO without finding fault in the books of account the AO rejected audited account and estimated profit on sales - nowhere, the AO has stated that particular items were sold at a price below the market price nor it is a case of AO that the assessee has purchased goods at higher price - mere selling of goods at low margin cannot be made the reason for rejection of books of accounts - thus, there was no justification for the rejection of the books of account and adhoc estimation of profit on sales the AO is directed to delete GP addition made by him Decided in favour of assessee.
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