Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 1374 - AT - Income TaxRejection of books of accounts - action of the AO in invoking the provisions of section 145(3) of the Act and rejecting the trading results of the assessee - HELD THAT:- In the present case, admittedly and undisputedly, there were no major defects pointed out by the AO warranting the rejection of books of account. The entire case of the AO is built around the suspicion of the assessee making huge cash sales of jewellery during demonetization period wherein each cash sale was below Rs.2 lacs each, not requiring submission of Permanent Account Number of the buyer of such jewellery items. However, it remains beyond doubt that all the sales had been routed through regular books of account and there is no dispute regarding availability of stock also. Therefore, there appears no justifiable reason for the AO to reach a conclusion that the books of account had to be rejected. No incriminating material had been unearthed during the course of search which would indicate that the assessee had either concealed sales in quantity or price-wise and, therefore, we do not agree with the action of the Ld.CIT(A) in upholding the rejection of books of account by the AO. Accordingly, ground No.3 of assessee’s appeal stands allowed. Restricting gross profit percentage to 20% - CIT(A) did provide some relief to the assessee by restricting the addition on account of gross profit to 20% of sales instead of 38.63% as made by the AO. However, while doing so the Ld.CIT(A) also conveniently ignored that the assessee’ gross profit rate for financial year 2014-15 was 15.75% and for financial year 2016-17, it was 16.28%. At most, even if the profits had to be estimated, the Ld.CIT(A) could have proceeded to work out an average rate of profit for these three years rather than applying gross profit rate of 20% arbitrarily and without any justification. This adhoc confirmation of addition, in our view, is not sustainable as it lacks any reasoning and is not supported by any data/figures. Therefore, in such a situation, we have no option but to set aside the order of the Ld.CIT(A) on the issue and direct the AO to delete the addition. Addition u/s 68 - unexplained cash credit (being alleged undisclosed money introduced by the assessee as sales) - HELD THAT:- CIT(A) has observed that there is merit in the arguments of the Ld. AR that once the revenue has been duly recorded in the books of account, the same cannot be treated or said to be unaccounted money or income and that there was no allegation against the assessee that these sales were not recorded in the books at all and the only allegation is that they were entered on a later date. The Ld.CIT(A) has also given a finding that on perusal of the day-to-day cash book, it is seen that there was sufficient cash in hand on those dates and even if the sales were taken out, the cash in hand did not become negative. No perversity has been pointed out by the CIT DR in this finding of the Ld.CIT(A) even during the course of arguments before us - Decided against revenue.
|