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| The Tax Publishers2020 TaxPub(DT) 4403 (Ahd-Trib) INCOME TAX ACT, 1961
Section 145(3)
Where no specific defect was pointed out by AO in the audited financial statements furnished by assessee, AO was not justified in rejecting assessee's books merely on the reasoning that assessee was not maintaining stock registers or gross profit was low as compared to earlier and succeeding year.
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Accounting method - Rejection of books - Reason, alleged co-relation between non-maintenance of quantitative/stock registers and low gross profit in comparison to immediately succeeding assessment year -
AO noticed that gross profit of assessee for the year under consideration was significantly low in comparison to immediate succeeding assessment year. Accordingly, AO rejected assessee's books of account by invoking the provisions of section 145(3) on the ground that assesse was not maintaining quantitative/stock registers of the items in which it was dealing. Held: Books of account could not be rejected merely on the reasoning that assessee was not maintaining stock registers because no specific defect was pointed out by AO in the audited financial statements furnished by assessee.. Also, lower gross profit as compared to earlier and succeeding year could not be the ground for rejection.
Supported by:Malani Ramjivan Jagannath v. Asstt. CIT reported in (2009) 316 ITR 120 (Raj) : 2009 TaxPub(DT) 0038 (Raj-HC).
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 36(1)(iii)
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