The Tax Publishers2021 TaxPub(DT) 0541 (Mum-Trib)


Section 145(3)

Where an examination of material on record showed that discrepancies pointed out by the AO regarding differences in opening stock were mere typographical errors and have got nothing to do with the accuracy of the books of account, it could not be a fit case for rejection of books of account under section 145(3) by the AO.

Accounting method - Rejection - Estimation of GP rate - Discrepancies pointed out by AO were mere typographical errors

AO rejected assessee's books of account under section 145(3) and proceeded to estimate the gross profit of assessee @4% of turnover and made an addition in the assessment on account of difference in the opening stock. Held: All the discrepancies pointed out were only typographical errors and do not have any impact in any manner, whatsoever, on the computation of total income of the assessee for the year under consideration. There was mistake in reflecting the quantity figures of stocks in the tax audit report. However, right quantity details have been duly reflected together with the values thereon for the assessment year 2012-13 and there was absolutely no difference in value between the closing stock and opening stock. Hence, there was absolutely no impact in the computation of profits as per books and computation of total income as per the Act for the year under consideration. Hence, there cannot be any grievance for the revenue at all in the instant case. Further, AO grossly erred in not crediting the export benefits in the recasted trading account prepared while working out the gross loss where assessee had made only export sales during the year and no local sales were made. Export benefits needs to be considered as trading receipt for the purpose of working out the gross profit of the assessee for the year under consideration. It was found that there is absolutely not much variation in the gross profit disclosed by the assessee also. Thus, this was not a fit case for rejection of books of account under section 145(3) by the AO.


FAVOUR : In favour of assessee

A.Y. : 2012-13



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