Rejection of books of accounts merely because of lower gross profit rate is unsustainable

ACIT Vs Omshree Agrotech Private Ltd (ITAT Pune)

ITAT Pune held that rejection of books of accounts invoking provisions of section 145(3) of the Income Tax Act simply because of lower gross profit rate in comparison to earlier years or with other assessees is not suffice and will not stand the test of rejection. Accordingly, such rejection is unsustainable

Facts- The respondent assessee is a private limited company engaged in manufacturing and trading of edible & non-edible oils etc. Whereupon a search action u/s 132 of the Act on ‘Omshree Group’ [Searched Party] was conducted, wherein as many as seven residential premises, three factory premises and a locker maintained at treasury branch of SBI Bank, Dhule were also covered.

Beside aforestated search action on the assessee group, a simultaneous survey action u/s 133A of the Act were also conducted at the factory premise of M/s Shree Gajanan Oil Mills, M/s Om Industries and at the business premises of M/s Sunil Traders [Other Party].

Consequent to search action u/s 132 of the Act, a proceedings u/s 153A of the Act were initiated against the assessee by service of notice thereunder and in response thereto, the assessee company filed its returns of income for six assessment years comprised of AY 2008-09 to AY 2013-14 and an ITR for the year of search i.e. AY 2014-15 was also filed.

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