Case Law Details
Total Integrated Design (India) Pvt. Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi held that addition on the basis of fall in gross profits without pointing out any specific discrepancy in accounts that resulted into suppression of true figure of gross profit is unsustainable in law.
Facts- The appellant has preferred the present appeal contesting that CIT(A) has grossly erred in making an addition towards unexplained expenditure u/s 69C of the Income Tax Act. Notably, the addition was on account of difference between Form 15CA and Tax Audit Report. Further, addition was also made on account of fall in GP rate.
Conclusion- We are unable to sustain the findings of Ld. CIT(A) for sustaining the addition partly on the basis of fall in gross profits without pointing out any specific discrepancy in accounts that resulted into suppression of true figure of gross profit. The findings should not be pure guess works, it should have certain foundation. In the case in hand, Lower authorities have failed to advert to the contentions of the assessee that difference between the figures reported in Form 26AS and actually recorded in the books of assessee was due to business model of assessee. The other party did not book expenditure in a particular year for that the assessee cannot be held responsible for them before. This fact ought to have been verified by the lower authorities before proceeding to reject books of accounts. Law is well-settled that the AO while resorting to estimation should consider all aspects surrounding the transactions. Merely because there is a fall in gross profit rate would not ipso facto be the reason for rejection of book results. Therefore, considering the material placed on record, the impugned order is hereby, set aside and the issue is restored to the file of AO for deciding it afresh.
FULL TEXT OF THE ORDER OF ITAT DELHI
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