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Harish Ahuja Versus Commissioner of Income Tax, Chandigarh

2015 (9) TMI 502 - PUNJAB AND HARYANA HIGH COURT

Rejection of books of account merely for absence of stock register - non-fulfillment of ingredients u/s 145(3) - Held that:- No substance in the argument raised by the learned counsel. AO passed the assessment order under Section 143(3) of the Act by applying GP rate of 10% on gross sales of 11.74 crores after rejecting the books of account under Section 145(3) of the Act on the ground that no stock register was maintained by the assessee and, thus, made an addition of 41,09,728/-to the total re .....

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The assessee was trading in the items of well established companies and is also a wholesaler C&F agent. In order to check veracity of the gross profit disclosed by the assessee, maintenance of stock register by the assessee was essential. The Assessing Officer had compared the gross profit rate of the assessee viz-a-viz other similar concerns. No satisfactory explanation had been furnished by the assessee for not maintaining the stock register. The rejection of books of account of the assessee .....

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to as the Tribunal ) in ITA No. 484/CHD/2013 for the assessment year 2009-10, claiming the following substantial question of law:- Whether on the facts and in law the ITAT is justified in upholding the rejection of books of account merely for absence of stock register, despite there being no other defect in sale, purchase and books of accounts; which means non-fulfillment of ingredients u/s 145(3) of Income Tax Act, 1961 regarding incompleteness or incorrectness of books of account as the AO hi .....

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filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity the CIT(A) ]. The CIT(A) vide order dated 1.3.2013 (Annexure A-2) while partly allowing the appeal of the assessee restricted the GP rate to 9% and upheld the rejection of books of account. Still dissatisfied, the assessee filed an appeal before the Tribunal who vide order dated 31.12.2014 (Annexure A-3) upheld the ground of rejection of books of account and directing the Assessing Officer to apply GP rate of 8% instea .....

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e rejection of books of account by the Assessing Officer, in the facts and circumstances of the case, was uncalled for. 4. After hearing learned counsel for the assessee and perusing the record, we do not find any substance in the argument raised by the learned counsel. The Assessing Officer passed the assessment order under Section 143(3) of the Act by applying GP rate of 10% on gross sales of 11.74 crores after rejecting the books of account under Section 145(3) of the Act on the ground that n .....

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ection of books of account, estimated the GP rate at 8% instead of 9% as ordered by the CIT(A). 5. The assessee was trading in the items of well established companies and is also a wholesaler C&F agent. In order to check veracity of the gross profit disclosed by the assessee, maintenance of stock register by the assessee was essential. The Assessing Officer had compared the gross profit rate of the assessee viz-a-viz other similar concerns. No satisfactory explanation had been furnished by t .....

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