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2015 (11) TMI 74 - BOMBAY HIGH COURT

2015 (11) TMI 74 - BOMBAY HIGH COURT - TMI - Rejection of book results u/s. 143(3) - estimating total income - revision u/s 263 - Held that:- We find that there was sufficient material available on record for the Assessing Officer to reach the conclusion that the books of account as produced by the Respondent Assessee were not reliable. The rejection of books of account were on account of cumulative factors such as the Respondent Assessee not being able to give the names and addresses of the per .....

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ct on behalf of Respondent Assessee cannot be now countenanced as the order dated 27th March, 2006 passed by the Commissioner of Income Tax under Section 263 was accepted by the Appellant. Be that as it may, we are of the view that there was material on record which supports the view taken by the Assessing Officer in rejecting the books of account under Section 145(3) of the Act. This has been confirmed by the Commissioner of Income Tax and the Tribunal by the impugned order. In the above facts, .....

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sment Year involved is A. Y. 2002-03. 2. Mr. Gandhi, learned Counsel appearing for the Appellant-Assesssee urges the following question of law, for our consideration: "Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in confirming the action of the respondent in rejecting the book results of the appellant u/s. 143(3) of the Act and/or in estimating total income of the appellant at ₹ 9,10,716/-?". 3. The Assessing Officer had originally pass .....

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he assessee have been carefully examined and considered. It is an undisputed fact as evident from the statement recorded during survey and referred above that the assesee had declared additional income of ₹ 8,00,000/- (not stock) at the time of survey on account of stock discrepancy found during survey and other discrepancies including some expenses incurred on renovation. This is also apparent from the fact that during the survey in the case of the assessee and it's sister concern M/s .....

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o convert their declarations of additional income as declarations of undisclosed stock. This has been done in this case by debiting ₹ 8,00,000/- in trading and Profit and Loss Account as stock declared u/s. 133A and crediting equal amount as income declared u/s. 133A. By this way, the assessee has brought in his books, additional income for which taxes had also been paid, has been nullified in fact by this volteface, the assessee has tired to retract its voluntary declaration of additional .....

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inkling of the same even though the survey was conducted at the closing of the year i.e. after 9 ½ months of the financial year had passed. The fact of the matter is that the assessee has casted it's Profit and Loss A/c. in a planned manner so as to dissociate itself from the committed taxability on additional income of ₹ 8,00,000/, declared during survey. It is also unfortunate that even though it was a survey case and specific discrepancy and other incriminating facts had come .....

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ared income has been also resorted by its sister concern M/s. Top Optics. This reference of the sister concern appears necessary as the two firms are family concern and similar strategy appears to have been adopted to nullify the survey conducted by the Department. In nutshell, the assessment order passed by the Assessing Officer in this case is held erroneous and prejudicial to the interest of Revenue. It is, therefore, set aside to be made afresh after examining all aspect of the matter as dis .....

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ion 145 of the Act and passed a fresh assessment order, inter alia,determining the Appellant-Assessee's total income at ₹ 9.11 lakhs. The Assessing Officer rejected the books of account, inter alia, on the ground that the Gross Profit (GP) rate declared by the RespondentRevenue for the subject assessment year was only 20.35% as against the rate of 34.73% declared in the immediately preceding year. A survey action was carried out on the Appellant on 17th January, 2002 and discrepancies .....

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s as recorded in the assessment order were taken into account while rejecting the books of account under Section 145(3) of the Act. The Assessing Officer, thereafter, applied the G. P. rate of 30.04% to complete the assessment determining the assessee's income at ₹ 9.10 lakhs for A. Y . 2002-03. 5. The Appellant-Assessee filed an appeal to the Commissioner of Income Tax (Appeals) [the CIT(A)]. By an order dated 22nd February, 2011, the CIT(A) upheld the order of the Assessing Officer d .....

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by the impugned order held that the books of account were rejected, inter alia, on account of low GP rate shown by the assessee in the year under consideration as compared to the immediately preceding year. Besides, the verification carried out as per the directions given by the CIT(A) in his order under Section 263 of the Act, the Assessing Officer found that GP rate for post survey period i.e. 17th January, 2002 was very low. It was also noted that the frames were sold by the Appellant-Assesse .....

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not furnished. Thus, on examination of material on record, the impugned order held that the Assessing Officer was justified in rejecting the books of account under Section 145(3) of the Act. 7. Mr. Gandhi, in support of the appeal submits that there was no justification for the Assessing Officer to reject the books of account under Section 145(3) of the Act. It is submitted by him that merely because Appellant-Assessee was unable to produce the complete details of sales made in cash of the defec .....

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the order passed in Revision dated 27th March, 2006 while determining income for the subject assessment year. This is particularly so submits, Mr. Gandhi is that observations in the order dated 27th March, 2006 passed in Revision by the Commissioner of Income Tax is not factually correct. In particular, the statement therein that the assessee had so cast its Profit and Loss Account so as to effectively neutralize itself from its commitment to offer an additional income of ₹ 8 lakhs to tax .....

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