9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 1270 - HC - Income TaxRejection of books of accounts u/s 145 - Tribunal held that in the absence of any defect being pointed out in the records, the invocation of Section 145(3) was not proper - HELD THAT - Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of accounts to disregard the same. CIT(A) in his order while rejecting the Books of Account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the Respondent s records which would warrant rejection of books and making a Best Judgment Assessment. Thus, on facts the view taken by the Tribunal is possible view Suppression of Sales - ITAT deleted the addition - HELD THAT - Revenue has not made any reference even remotely that the Respondent had received amounts in excess of that shown in the agreements in respect of twelve flats which is not being accepted. The entire case of the Revenue is merely on suspicion. It is not the case of the Revenue that the Respondent made secret profits out of sale of the twelve flats. - Decided in favour of assessee.
Issues:
1. Invocation of Section 145(3) of the Act for rejection of books of accounts. 2. Deletion of addition made by CIT(A) on account of understatement of sales value. Analysis: Issue 1 - Invocation of Section 145(3) of the Act: The Respondent, engaged in property development, faced an assessment for the year 2005-06. The CIT(A) rejected the Books of Account under Section 145(3) of the Act and completed the assessment on a best judgment basis. However, the Tribunal found no defect in the Respondent's records to warrant the rejection of books. The Tribunal held that the invocation of Section 145(3) was unjustified without any noted defect in the books. As per legal principles, the rejection of books should precede a best judgment assessment. Since no defect was shown by the Revenue, the Tribunal's view was considered reasonable, leading to no substantial question of law arising. Issue 2 - Deletion of Addition by CIT(A) on Understatement of Sales Value: The CIT(A) reassessed the sale consideration of twelve flats based on a market rate of ?8,992 per sq.ft., resulting in an addition of ?5,30,80,200. However, this basis was not adequately supported in the order. The Revenue contended that the stamp duty rate should determine the sales value. At the relevant time, no provision existed in the Act to deem consideration based on stamp duty valuation for assets other than capital assets. The Division Bench's decision in a similar case clarified that Section 50C does not apply to stock in trade, emphasizing the need for a statutory provision for deeming fiction. The Revenue's suspicion without evidence of secret profits or excess amounts received made the case weak. Legal precedents highlighted that a trader is not obliged to maximize profits, and income tax applies only to earned income. Therefore, the Tribunal's decision to delete the addition was upheld, and no substantial question of law was found. In conclusion, the appeal challenging the Tribunal's order was dismissed, affirming the decisions on both issues raised by the Revenue.
|
