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TMI Blog2017 (2) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts and estimate the profit at a certain percentage of the gross receipts. (2) On the facts and circumstances of the case, ld. CIT(A) erred in observing that no sufficient and specific findings were brought on record which could have warranted rejection of books of accounts. (3) On the facts and circumstances of the case, ld. CIT(A) erred in observing that non-furnishing of details of sundry creditors in a proper way was not sufficient reasons to reject books of accounts. 2. The assessee in the present case is a joint venture between M/s. SPML and M/s. CISC Limited for carrying out some works contract jointly. The return of income for the year under consideration was filed by it on 08. 02.2010 declaring a loss of Rs. 1, 36, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that assessment proceedings began vide notice issued u/ s 142 ( 1 ) in August, 2011 . However, details of creditors were not requisitioned in the said notice. Later, in course of hearing in November the assessee was asked to produce the details of creditors. 2.2. The assessee produced the complete break-up of the creditors ( party-wise) together with their addresses in the last week of November. It was only with respect to the creditors of Rs. 43 ,95 ,311 /- that the addresses could not be provided because the project ( pertaining to such creditors) got terminated and all the books of account ( including the creditor details) had to be transferred to different locations. To worsen the situation the concerned accountant also quit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant to adduce evidence relevant to any ground of appeal." 3.2. From the above it is clear that the CIT( A) may admit additional evidence under Rule 46 A of Income Tax Rules, 1962 in case the assessee was not provided sufficient opportunity by the AO and in case the assessee was prevented by sufficient cause from producing the evidence as called upon by the AO. 3.3. Thus applying the said rule to the facts of the case it is clear that details of balance creditors produced at this stage should be admitted under Rule 46 A. 4.1. Further, it is pointed out that the action of the AO in rejecting books of account u/ s 145 ( 3 ) and computing the income of the assessee by applying the average GP ratio of the industry is completely un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of sundry creditors submitted at the appellate stage has been duly considered and admitted since it is apparent that the appellant was prevented by sufficient cause from producing the evidence as called upon by the AO. I find that the AO has not pointed any specific deficiency in the accounts of the appellant warranting the application of section 145 of the Act and more so since it is pointed out that accounts of the appellant are audited and in the absence of any adverse remark in the auditor' s report, there lies a presumption that books of account maintained by the appellant is correct. The same cannot be rejected u/ s 145 ( 3 ) in the absence of any finding recorded by the AO that the books of account were incorrect rendering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore deleted". Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal. 5. The ld. D.R. submitted that specific defects were pointed out by the Assessing Officer in the books of account and other record maintained by the assessee and the same were sufficient to reject the book results declared by the assessee by invoking the provisions of section 145( 3). He contended that although the said defects were claimed to be removed by the assessee before the ld. CIT(Appeals), the details filed by the assessee in this regard were not confronted by the ld. CIT(Appeals) to the Assessing Officer in order to give him an opportunity to verify the same. He contended that the issue involved in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. It is observed that the books of account of the assessee were rejected by the Assessing Officer merely on the basis of the failure of the assessee to furnish the complete details of the creditors as required by him and there was no other defect pointed out by the Assessing Officer in the books of account maintained by the assessee to justify the rejection of books of account. As held by the Hon'ble Guwahati High Court in the case of Madnani Construction Corporation Pvt. Limited (supra) cited on behalf of the assessee, the failure of the assessee to give details of the sundry creditors may be a ground for raising suspicion, but suspicion alone is not enough for invoking the powers of best judgment. Moreover, the relevant details as s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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