Case Law Details
Devyani Tex Chem Pvt. Ltd. Vs ACIT (ITAT Surat)
From the above facts it is abundantly clear that books of accounts of the assessee were rejected by the assessing officer and on appeal, ld CIT(A) upheld the rejection of books of accounts and reduced the profit estimation. We also upheld the order of ld CIT(A), so far rejection of books of accounts are concerned, that is, ld assessing officer has rightly rejected the books of accounts of the assessee which was confirmed by the ld CIT(A). Where the AO himself rejected the books of account of the assessee after holding that assessee`s books do not show true results and made an estimate addition on gross profit basis then other item-wise disallowance should not be made. For that reliance can be placed on the judgment of the Hon`ble Karnataka High Court in the case of Bahubali Neminath Muttin [2016] 73 taxmann.com 100 (Karnataka), wherein it was held as follows:
“15. The principle that if a finding of fact is not challenged as being perverse, the High Court is bound to accept such finding. Therefore, as no such substantial question of law has been framed and the questions pertain to findings of fact, which cannot be said to be perverse as it is evident that the books of accounts of the respondent had been rejected by the assessing authority, in which case the same books of accounts could not be relied upon in an addition on account of trade creditors and also for arriving at the closing stock. This is an established principle as has been held in the decisions relied upon by the respondent namely Indwell Constructions case (supra), Banwari Lal Banshidhar’s case (supra), Aggarwal Engg. Co.’s case (supra) and Amman Steel & Allied Industries case (supra).”
Thus, we note that, once books of account are rejected then it cannot be said that it shall be good for one purpose and not for other and, therefore, no separate addition of Rs.1,75,840/- of alleged fictitious liability and addition of Rs.16,15,745/- under section 41 of the Act can be made.
FULL TEXT OF THE ORDER OF ITAT SURAT
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