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2015 (7) TMI 730 - AT - Income TaxAddition on account of low GP, after rejecting books of accounts - CIT(A) deleted the addition - Held that:- The Assessing Officer, while rejecting the books accounts, has not pointed out that the books of accounts of the assessee is incorrect or incomplete. Similarly, he has no where stated that the assessee did not follow the method of accounting provided u/s 145(1) or accounting standards as prescribed u/s 145(2). Therefore, in our opinion, no adequate reasons have been given by the Assessing Officer for rejection of the books of accounts. Merely because the gross profit is low, it would not be sufficient to reject the books of accounts. The low gross profit can be a reason to probe deep into the accounts so as to ascertain whether the accounts are correct or not. But, that by itself is not sufficient to reject the books of accounts. In fact, the reasons given by the Assessing Officer justify the low gross profit disclosed by the assessee. If the assessee has a meager capital of ₹ 1,25,000/-, she does not have any business premises and she does not have any employees. It only supports the contention of the assessee that she is simply working as an intermediator between the buyer and the seller. She first books the order from the buyer and then arranges for the seller. The goods is supplied directly by the seller to the buyer and the payment to the seller is made after receiving the payment from the buyer. She has also explained that she has kept a very small percentage of margin so as to achieve huge turnover. All the facts narrated by the Assessing Officer for rejection of books of accounts and estimation of profit does not satisfy the conditions prescribed u/s 145(3) for rejection of books of accounts. On the other hand, these facts justified low GP disclosed by the assessee. Moreover, we find that under the identical set of facts, the Assessing Officer in the order passed u/s 143(3) in assessee’s own case for Assessment Year 2010-11, accepted the assessee’s books of accounts wherein the GP rate of 0.13% is disclosed. - Decided in favour of assessee.
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