Case Law Details
Cresent Co. Vs CIT (Orissa High Court)
In the present case, mere non-issuance of production of sale memos could not have been a ground to reject the entire books of account particularly since it pertained to sale of country liquor to tribal populations. Also the ITAT appears to have overlooked the fact that the books of account of the Assessee were not rejected by the Excise Department and that the ITAT itself had accepted them for the subsequent AY 2001-02.
Although the AO accepted the fact that there was nothing wrong with the Assessee’s books of accounts, only on the ground that sales memos were not filed, the books of accounts were rejected by the AO. When the matter went in an appeal to the CIT(A) it was noted by him in Para 1.3 of the order dismissing the appeals that “it is true that the AO had not pointed out any specific omission or commission nor cited any specific instance of irregularity in the books of accounts” and that the only reason for rejection was that “element of inflation in purchases or incorrectness of purchase could not be ruled out”.However, it was again surmised that “there was also possibility of suppression of sale price”. It is therefore plain that both the AO and CIT(A) proceeded on surmises and conjectures with no supporting material to justify the rejection of the Assessee’s books of accounts. The ITAT having accepted the Assessee’s accounts for the subsequent AY 2001-02 for some reason did not acceptthem as far as the AY in question was concerned.
Where the issue is of sale of country liquor to tribal populations to expect the Assessees to issue sales memos is not even realistic. Importantly, since the books of account of the Assessees in the present appeals have been accepted by the Excise Department, and for the subsequent year AY 2001-02 by the ITAT, there was no reason to resort to surmises and conjectures and ‘best judgment assessment’ to reject the Assessee’s books of account for the AY in question.
FULL TEXT OF THE JUDGMENT/ORDER of ORISSA HIGH COURT
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