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2022 (1) TMI 299 - HC - Income TaxRejection of books of accounts - valuation of the closing stock - gross profit margin - Assessment was complete u/s 143(3) - After that, during survey u/s 133A, assessee could not produce stock register - HELD THAT:- How much of it weighed with the AO is anybody’s guess. The fact remains that it continued to be referred to in the order of the CIT (A) and, as noted hereinbefore, the ITAT as well. The survey operation took place at a time when the previous year corresponding to AY in question had already ended. Therefore, what transpired during the survey operation could not have been taken into account. Re-working of the Assessee’s gross profit rate for the AY in question appears to be based on surmises and conjectures, triggered as it were by the ITAT’s rejection of the Assessee’s books of account under Section 145 of the Act. Mr. Ray for the Assessee is right in contending that with the assessment having been completed under Section 143 (3) of the IT Act, and after the Assessee had produced its books of account, the question of invoking Section 145 of the IT Act did not arise. Court is satisfied that in rejecting the Assessee’s book of account u/s 145 of the IT Act, the ITAT committed a serious error. It proceeded on that basis to re-work the gross profit margin. Question of law framed by this Court by order dated 10th July, 2017 is answered in the affirmative, i.e., in favour of the Assessee against the Revenue by holding that the ITAT erred in affirming the conclusions of the AO and CIT(A) based on materials collected during the period subsequent to the assessment period since each assessment year is separate. The corresponding orders of the AO and the CIT (A) to the above extent, are also set aside.
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