INCOME TAX ACT, 1961

Section 145(3)

Accounting method - Rejection - AO rejected books of account based on reasoning given in other case without even considering explanation given by assessee -

Assessee was a notified person under Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 and his all assets including bank accounts were attached and vested in the hands of the Custodian appointed under said Act. AO on the basis of finding in case of Late Harshad Mehta who was the broker rejected assessee's books and framed assessment under section 144. Assessee's case was that reason given for not accepting books of account in case of Harshad Mehta was not liable to be considered for rejecting books of account in case of assessee, further, assessee had given explanation for accepting books of account by way of letter and however, said reasons were not considered.Held: Case of assessee was quite different from the case of Harshad Mehta who was a broker. Accordingly case of assessee was independently liable to be examined and comparison if any with the case of Harshad Mehta was not justifiable, specifically in the circumstances when facts and figures were quite different. Moreover, each and every explanation given by assessee was liable to be considered while accepting or rejecting books of account. Accordingly, issue was restored to AO to decide the matter of controversy afresh.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 1992-93

INCOME TAX ACT, 1961

Section 14A Rule 8D

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