Rejection of books of accounts merely for inconsistent GP ratio is bad in law: HC

Brief of the case:

The Hon’ble Himachal Pradesh High Court in the case of CIT vs. Swastik Foods held that the rejection of basis by merely expressing a doubt about the correctness of profit declared taking inconsistent GP ratio as basis cannot be a said to be rejection of books for incompleteness or incorrectness. Therefore, such rejection is not in line with Sec 145(3) and thus, bad in law.

Facts of the case:

• The assessee firm engaged in the business of manufacture and sale of wheat products. For the A.Y. 2003-04, it filed a return showing income of Rs. 34,71,660/- and claimed the entire amount as deduction under Section 80IB and accordingly declared NIL income in the return.

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