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M/s BP Ferrium Industries Pvt Ltd (Formerly Known AS M/s Godavari Exports And Imports Pvt Ltd) Versus Asstt Commissioner Of Income-Tax & Others

2015 (5) TMI 184 - ITAT HYDERABAD

Rejection of books of account - estimation of profit - specific defect or deficiency not pointed - Held that:- books of account maintained by assessee in regular course of business have to be treated as authentic unless there are strong evidence brought on record to show that entries made in the books of account are not reliable, hence, books of account have to be rejected. We are of the view, before rejecting the books of account AO should not only give adequate opportunity to assessee to expla .....

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ised nine grounds. Ground No. 1 & 9 being general in nature do not require any specific adjudication. Ground Nos. 2 to 6 are on the common issue of rejection of books of account and estimation of profit by ld. CIT(A) at 0.7%. Whereas, the only ground in department s appeal is challenging the decision of ld. CIT(A) reducing estimation of profit from 1% to 0.7%. 3. Briefly the facts relating to the aforesaid issue are, assessee a company is engaged in the business of trading in steel products. .....

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t in absence of delivery challans, purchase could not be verified. He also observed that most of the purchase bills were issued from sister concerns of assessee. AO observed, as assessee could not produce any corroborative evidence to prove genuineness of the purchases and the corresponding expenditure, books of account are not reliable. Accordingly, AO proceeded to reject the books of account u/s 145 of the Act and estimated the profit from the steel trading business @ 1% on the gross sales. As .....

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grieved of such decision, both assessee as well as revenue are in appeals before us. 5. Ld. AR submitted before us that there is no valid ground for rejection of books of account as AO has not found specific defect/deficiency in the books of account maintained by assessee. Ld. AR submitted, assessee can explain each entry of the books of account with supporting evidence if opportunity is given to assessee. In this context, ld. AR referred to an order of the coordinate bench of ITAT, Hyderabad in .....

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ssessee has not been able to prove the entries made in the books of account by furnishing adequate evidence, hence, AO was justified in rejecting the books of account and estimating the profit at 1%. Ld. DR submitted, rate of profit adopted by AO being reasonable, ld. CIT(A) was not justified in reducing the same to 0.7%. 7. We have considered the submissions of the parties and perused the materials on record as well as the orders of the revenue authorities. The sole grievance of assessee, as ev .....

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y give adequate opportunity to assessee to explain the entries made therein, but also point out any specific defect or deficiency in the books of account. In case of DCIT Vs. Glogal Forging Ltd. (supra)referred to by ld. AR, the coordinate bench held as under: "8. We have heard the arguments of both the sides and also perused the relevant material on record. In view of the plea of the ld. counsel for the assessee for one more opportunity of producing the books of account and other material .....

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shall accordingly redecide the matter in accordance with law and after giving reasonable opportunity of hearing to the assessee." Respectfully following the aforesaid decision of the coordinate bench rendered in case of another group concern under identical facts and circumstances, we remit the matter back to the file of AO to decide the issue afresh after affording reasonable opportunity to assessee to produce books of account along with supporting evidence as may be necessary, to substan .....

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