PCIT-17 Vs Time & Space Haulers (Bombay High Court)
The Bombay High Court considered a Revenue appeal under Section 260A of the Income Tax Act, 1961, challenging the Income Tax Appellate Tribunal’s order for Assessment Year 2007-08. The Revenue raised two questions of law: (i) whether the Tribunal was justified in upholding the Commissioner (Appeals)’ order despite the Assessing Officer rejecting the books of account under Section 145(3), and (ii) whether the Tribunal was justified in restricting a disallowance of ₹16 lakh to ₹3 lakh when the assessee had itself disallowed ₹16 lakh in its computation of taxable income.
On the first question, the High Court observed that both the Commissioner (Appeals) and the Tribunal had found no basis for rejecting the books of account. The Assessing Officer had neither questioned the correctness nor the completeness of the books before rejecting them, had not identified any defect in the books produced, and had ignored the fact that the accounts had been duly audited. Although the Revenue submitted that the assessee had failed to respond to repeated queries, the Court held that the Assessing Officer’s order did not reflect the dissatisfaction regarding the correctness or completeness of the books required for invoking Section 145(3). Accordingly, the Court held that this question did not give rise to any substantial question of law and declined to entertain it.
