Gorja Steel Processors Vs DCIT (ITAT Delhi)
The assessee filed appeals against orders of the Commissioner of Income Tax (Appeals) relating to assessment years arising from assessments made under Sections 143(3)/153A of the Income Tax Act. Although multiple grounds were raised, during the hearing the assessee restricted its arguments to the issues concerning rejection of books of account under Section 145(3) and the consequent trading additions based on estimated gross profit.
A search and seizure operation was conducted on 30.07.2018 on the assessee group. The Revenue alleged that group concerns engaged in bogus purchase and sale entries, particularly in the last quarter of the year, to inflate turnover and expenses. The Assessing Officer (AO) relied on statements recorded during the search and pre-search inquiries, including statements alleging bogus transactions, under-invoicing, maintenance of parallel books, and routing of funds among related concerns.
Based on these allegations, the AO concluded that the correctness and completeness of the books of account were doubtful. The AO rejected the books under Section 145(3) and estimated gross profit at 4%, resulting in an addition of Rs. 61,93,125. The Commissioner (Appeals) upheld the rejection of books but reduced the gross profit rate to 3%, thereby sustaining an addition of Rs. 43,31,703.
