ITO v. Rajkalp Mudraalaya (P) Ltd. [ITA No(s).
1894/Ahd/2013, dt. 22-10-2020] : 2020 TaxPub(DT) 4403 (Ahd-Trib)
Facts of the Case:
Rejection of Books of Accounts
1. Assessing officer rejected books of accounts due to fact
that quantity details were not maintained.
2. In order to operate new machine training was provided to
staff members but there was much wastage of papers -- resulted in to GP
reduction.
3. Due to change in technology there were expenses
increased significantly such as blanket purchase, chemical purchase, coating
film, Ink purchase and paper purchase, but there was no corresponding inflated
sales price charged from the customer in the year under consideration which has
also contributed in the reduction in the gross profit in the year under consideration.
4. Non maintenance of quantitative records can not be the
reason for rejection of books of accounts.
5. Assessing officer has compared consumption of raw
materials for the year under consideration with the subsequent assessment
years.
6. The assessing officer has not discharged his duty by
pointing out any specific defect in the financial statements of the assessee
which are duly audited by the qualified auditors.
7. As per section 145(3) of the Act, the assessing officer
is empowered to reject the books of accounts of the assessee and make best
judgment assessment in the manner as specified under section 144 of the Act, if
he is not inter alia satisfied with the completeness or correctness of
the books of accounts of the assessee. Generally, the instances for the
rejection of books of account include when entries in respect of certain
transactions are altogether omitted or incorrect or where the accounts show an
abnormally low rate of profit or where there is an inherent lacuna in the
system of accounting.
Disallowance of Interest:
The interest should be capitalized from the date of
installation and such date is the date when the asset was ready to use.