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2015 (12) TMI 366 - AT - Income TaxEstimation of income - Rejection of books of accounts - addition made on account of undervaluation of work-in-progress in the closing stock - CIT(A) deleted the addition made on account of estimation of GP by holding that AO was not justified in rejecting the books of accounts but sustained the addition made on account of undervaluation of work-in-progress in the closing stock - Held that:- The law is well settled that the insignificant defects in the books of accounts should not be the basis of rejection of the entire books of accounts. In the present case, we find that the ld.CIT(A) has explained point-wise as to how the reasoning of the AO for rejection of books is not tenable in law. We are in agreement with the reasoning of the ld.CIT(A), as the finding is based on uncontroverted facts. The judicial pronouncements as relied by the ld.CIT-DR would not apply on the facts of the present case, as the facts are distinguishable. The ld.CIT-DR has relied on the judgement of Hon’ble High Court of Kerala in the case of S.Murugappa Chettiar vs. CIT (1987 (5) TMI 7 - KERALA High Court) in support of contention that difference in statement of stock to the bank and that disclosed to Revenue is a justified ground for rejection of books of accounts. The ld.CIT(A) has also given finding after verifying the facts in respect of objections of the AO regarding sundry debtor, which has been duly reconciled. Difference in work-in-progress is added back by the ld.CIT(A). Taking a holistic view of the entire matter, we do not see any reason to disturb the finding of the ld.CIT(A). Accordingly, same is upheld. Moreover, in our considered view, the AO has not given any basis for estimation of net profit @ 5% of turnover. - Decided against revenue.
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