2015 (4) TMI 106 - HC - Income Tax

Rejection of the books of account - addition to income - estimation to turnover - Held that - The Tribunal has found that though the present assessee is a limited company but it is associated with Pravin Kumar Jain group. Pravin Kumar Jain and his brother Pankaj Kumar Jain were Directors in the assessee company. However the assessee was engaged in the business of trading of goods. The books of account of the assessee were audited. No defect or discrepancy was found. In these circumstances and when there was no material other than the statement of Pravin Kumar Jain then the books of account of the assessee could not have been rejected only by relying on the same. There is no specific defect which was pointed out by the assessing officer in the books of account. In the circumstances the Commissioner s order sustaining the estimation of the turnover by the assessing officer partially was rightly set aside by the Tribunal. - Decided against revenue.

Summary

Issues:
1. Challenge to the order passed by the Income Tax Appellate Tribunal by the revenue.
2. Dispute over the assessment year 2008-09.
3. Partial relief granted by the Commissioner of Income Tax (Appeals).
4. Disallowance of business expenditure claimed by the assessee.
5. Rejection of books' results under section 145(3) of the Income Tax Act.
6. Estimation of income by the assessing officer.
7. Association of the assessee with Pravin Kumar Jain group.
8. Validity of rejection of books of account by the Tribunal.
9. Justification of rejection under section 145(3) of the Income Tax Act.

Analysis:
1. The High Court of Bombay heard an appeal by the revenue challenging the order of the Income Tax Appellate Tribunal regarding two appeals, one by the assessee and another by the revenue, related to the assessment year 2008-09.

2. The Commissioner of Income Tax (Appeals) had partially set aside the assessing officer's order in response to an appeal by the assessee. The Tribunal found the disallowance of business expenditure claimed by the assessee to be erroneous, leading to the rejection of books' results under section 145(3) of the Income Tax Act.

3. The Tribunal's decision was based on the association of the assessee with the Pravin Kumar Jain group, where it was considered not an independent unit but part of the group engaged in similar activities. The Tribunal concluded that the assessing officer's estimation of income was justified, and the Commissioner's partial sustenance of the additions was incorrect.

4. The High Court disagreed with the revenue's argument that the rejection of the books of account under section 145(3) was justified, as the Tribunal provided satisfactory reasons for its decision. The Court emphasized that as long as the Tribunal's view is plausible and not perverse, seeking re-evaluation is impermissible in law.

5. Ultimately, the High Court dismissed the appeal, upholding the Tribunal's decision and stating that the revenue's attempt to challenge the factual conclusions without perversity was not permissible. No costs were awarded in the case.