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TMI Blog2005 (3) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... tions have been heard and record perused. During the course of assessment, the Assessing Officer observed that along with return of income, the assessee had filed copy of the audited Profit & Loss Account and Balance Sheet with tax audit report under section 44AB of the I.T.Act. The assessee is engaged in the business of trading of sale and purchase of tractors and related accessories and spare parts. The assessee normally followed mercantile system of accounting. 4. Gross Profit at 5.06 per cent has been shown during the year, as against 6.75 per cent of the last year and 6.23 per cent for the assessment year 1992-93, however, the average gross profit rate works out to 4.49 per cent. The Assessing Officer observed that the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tractors, at the time of assessment proceedings, but the same have been reconciled during the course of appellate proceedings. As per the CIT(A) even though no stock register was available for spare parts sold by the assessee, but the Assessing Officer has not made a case that profit on sale of the spare parts have been suppressed. Non-maintenance of stock register attracts section 145 of the I.T. Act, but that considering the result shown are correct and in conformity with the result shown in the earlier years, and that of another assessee, in the same line of business and no trading addition can be made even stock registers are not maintained. He further observed that in this case no such findings have been incorporated by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase and sales of each and every items, in which no defects was found by the Assessing Officer. 8. We have considered the rival contentions and carefully gone through the orders of the lower authorities and found from the record that the major defects pointed by the Assessing Officer in the books was regarding the difference in sale of one tractor, which was duly reconciled before the Commissioner (Appeals) and the same were sent by the Commissioner (Appeals) to the Assessing Officer for his examination. As per the reconciliation statement, we found that difference in sale of one tractor was due to sale return and the same was duly accounted for in the books of account and satisfactorily explained during the course of appeal proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rejection of accounts should not be done light heartedly. As per the provisions of the Income-tax Law, the assessee has to substantiate his return and if he furnishes necessary evidence, which in the normal course things, is known as books of account, bills, vouchers etc. in support of his return. Then in order to rebut the assessee's reliance/submissions, when the return is substantiated with such books of account, it is the revenue's duty to carry out proper investigation and verification from such books of account and must call for any other explanation or evidence if so required. After pointing out specific defects, if any in the books of account, the Assessing Officer may proceed to determine the assessee income as per the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are implicit in the expression 'best of his judgment' though there is an element of guess work, in best judgment assessment, it shall not be wild one, but shall have reasonable nexus to the available material and circumstances of each case. The Hon'ble Rajasthan High Court in the case of CIT v. Gotan Lime Khanij Udyog [2002] 256 ITR 243 observed that mere rejections of books of account not necessarily lead to additions to the returned income or different figure of income than what has been disclosed by the assessee. Even after invocations of provisions of section 145, ipso facto does not mean that the rejection of books of account, the assessee must yield to a higher rate of gross profit than the declare one and different concl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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