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2015 (4) TMI 221

Validity of revision u/s 263 - CIT rejected the books of accounts - Assessee has taken new unsecured loan and AO has obtained confirmation only Bank A/c of lender has not been obtained to examine the creditworthiness - Assessee has paid designing charges and it is not enquired as to whether TDS was made on these payments - A.O. has not taken any details nor made any enquiry on a/c of fire loss claimed - Duty draw back is set off totally & negligible profit is shown

Held that:- Unable to see whether the CIT provided opportunity of being heard to the assessee which is paramount and mendatory requirement of the Act prior to invoke provision of Sec. 145(3). The CIT rejected books of accounts by pointing out that the business results could not be ascertained or verified in the absence of bills, vouchers and other relevant records to support the same. The CIT also noted that the stock details are not verifiable as raw material are given in weight while finished goods in nos. and size of finished goods is also not given. The deficiencies as noted by the CIT cannot held inclusive until and unless the assessee is provided due opportunity of being heard to explain his stand which has not been granted by the CIT. Thus the CIT rejected books of accounts of the assessee in a unjustified manner and rejection of books and estimation of net profit in pursuant to it and enhancing the assessment without affording due opportunity of hearing to the assessee is not only against the scheme of the Act but also violative to the principles of natural justice and hence, conclusion of CIT is not sustainable cannot be held as valid in this regard. See B.S.Sangwan (2015 (1) TMI 1011 - ITAT DELHI) - Decided in favour of assessee.


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