Case Law Details
ACIT Vs Vimoni India Pvt. Ltd. (ITAT Delhi)
During the proceedings before the CIT(A), the assessee provided an explanation for the decrease in the net profit ratio. It was argued that the closure of the unit at Barotiwala and the seizure of assets by the State Bank of India, due to the assessee’s inability to repay the loan, had prevented the auditors from verifying the fixed assets and stocks. The CIT(A) reviewed the facts and submissions and concluded that the AO had rejected the books of accounts solely based on the qualifications mentioned in the statutory audit report. Citing the decision of the Hon’ble Kerala High Court in the case of Vadayattu jewellery (104 STC 121), which held that the rejection of books of account is not justified when the defects are of a general or technical nature, the CIT(A) disagreed with the rejection of the books of accounts and the income estimation by the AO. Consequently, the CIT(A) directed the AO to delete the disallowance.
The ITAT noted that the AO had stated categorically that the assessee had not produced the books of accounts during the scrutiny assessment proceedings. However, upon reviewing the reply dated 02.03.2015 and placed on pages 157 and 158 of the paper book, it was mentioned by the assessee that the books of accounts and vouchers were being produced for verification. Similarly, in the reply dated 18.02.2015 at page 146 of the paper book, the assessee stated that no details were pending as per the query letters dated 02.01.2015 and 11.12.2013. Furthermore, exhibits 98 to 101 of the paper book provided quantitative details of the stock of each item dealt by the assessee.
Considering these pieces of evidence on record, the ITAT concluded that it would be unjust for the AO to claim that the assessee had not maintained proper books of accounts, which were not produced during the assessment proceedings. Taking into account the overall facts of the case, the ITAT found no errors or deficiencies in the CIT(A)’s findings and consequently dismissed the revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
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