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2020 (7) TMI 213 - AT - Income TaxRejection of books of accounts u/s 145(3) - trading addition - assessee is a liquor contractor and doing the business at a very remote area - HELD THAT:- Assessee was asked to submit his books of accounts and he has admitted to have not maintained any day to day stock register, sales vouchers, expenses vouchers and as a result, the AO has held that the sales and other expenses are not verifiable and the books of accounts maintained by the assessee were held not reliable and were rejected by the Assessing Officer by invoking the provisions of section 145(3) of the Act. Nothing has been brought on record which substantiate the price at which the sales has been made during the year, what price the individual goods have been purchased, their MRP and actual sale price. Further, maintenance of stock register is essential not just for determining the opening and closing stock but for establishing the necessary linkage with the goods purchased and sold during the year. The assessee may plead for non-maintenance of sale bills being involved in retail sale of liquor however, at the same time, the assessee cannot plead non-maintenance of stock register. Being the first year of operation cannot be a ground for non-maintenance of proper books of accounts. Therefore, in the entirety of facts and circumstances of the case, we uphold the rejection of books of accounts under section 145(3) of the Act and the ground of appeal so taken is rejected. Once the books of accounts are rejected, the AO is required to estimate the gross profit in the hands of the assessee and for the purposes, the prior history of the assessee in his own case or contemporaneous third party data has been held as a reliable basis for estimation of profits. In the instant case, this being the first year of operation, one has to consider the comparable third party data of assessee engaged in similar line of business pertaining to year under consideration. In absence of any contemporaneous data available on record, we decline to interfere in the findings of the ld CIT(A) where he has already reduced the trading addition to ₹ 2,59,620/- from ₹ 5,18,728/- made by the AO and the fact that the Revenue is not in appeal against the said findings and the ld DR has supported the said findings. Assessee appeal is dismissed.
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