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TMI Blog2024 (11) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of accounts of the assessee since it gives power to the AO to make a best judgement assessment. The AO surely cannot reject the Books on his own whims and fancies. As pointed out by the in terms of provisions of Section 145(3) the Assessing Officer is duty bound to find patent, latent and glaring defects in the books of accounts while rejecting the Books of the assessee. The reliance placed on the decision of Vikram Plastics [ 1998 (8) TMI 43 - GUJARAT HIGH COURT ] clearly holds that for the purpose of rejecting the books of accounts of the assessee, discrepancies and defects in the same need to be pointed out. In the facts of the present case, admittedly no defects or discrepancies have been pointed out. The rejection of books of accounts is merely on the basis of surmises and conjectures of the AO which he has based on a mere financial analysis of the sales and cash data of the assessee for the impugned year and the immediately preceding year. Admittedly, no discrepancy in the books of accounts maintained by the assessee was pointed out before rejecting the books of accounts, and since it is settled law that the rejection of books of accounts can take place only when the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer rejected the books of accounts of the assessee noting huge anomaly and differences in the financial figures of sales and cash in hand available with the assessee in the impugned year as compared to in the preceding year; finding abnormal increase in cash sale made by the assessee just prior to demonetization, which cash he found was shown as deposited in the bank account of the assessee, and the cash deposits thus justified as representing the cash collected from sales made by the assessee. After rejecting the books of accounts of the assessee, the Assessing Officer went on to treat the entire cash deposits in the bank account of the assessee of Rs. 4,12,67,000/- as from unexplained sources u/s 68 of the Act. 4. The assessee carried the matter in appeal before the ld. CIT(A) who upheld the rejection of books of accounts as also the addition made u/s 68 of the Act of the cash deposits in the bank account of the assessee of Rs. 4,12,67,000/-. 5. Aggrieved by the order of the ld. CIT(A), the assessee has come up in appeal before the Tribunal raising the aforesaid grounds. 6. Ground Nos. 1 6 are general in nature and need no adjudication. 7. Ground No.2 raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the books of accounts of the assessee. That despite all the books of accounts, vouchers and other documents being produced before the Assessing Officer, neither were the same examined nor a single anomaly pointed out by them in it. That the only basis for rejecting the books of accounts of the assessee was on mere surmises and conjectures of the Assessing Officer. That the Assessing Officer merely studied the financial data of the assessee of the preceding year and the impugned year, and noted allegedly huge increase in cash sales made by the assessee, in cash in hand of the assessee prior to the demonetization and in cash deposited in the bank account of the assessee during demonetization period. That despite the justification submitted by the assessee with regard to the huge increase in cash sales in the impugned year by pointing out that the sales were backed by adequate purchases made by the assessee also and other reasons, the Assessing Officer merely on account of the abnormality in the alleged financial data noted by him held that by applying the principle of preponderance of probability, the books of accounts of the assessee were all made up and not correct, and huge cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be exercised in a subjective manner. The reason being that serious consequences follow the rejection of the Books of accounts of the assessee since it gives power to the AO to make a best judgement assessment. The AO surely cannot reject the Books on his own whims and fancies. He has to give basis for finding the Books unreliable and not capable of revealing the true financial picture of the assessee. Books of accounts can be rejected as unreliable if important transactions are omitted therefrom, or if proper particulars and vouchers are not forthcoming or there is an inherent lacuna in the system of accounting or where sales vouchers and stock registers were not maintained or where there were deficiencies and discrepancies in the books of accounts or where bogus purchases were recorded and opening and closing stock was not verifiable. As pointed out by the ld. Counsel for the assessee, in terms of provisions of Section 145(3) of the Act, the Assessing Officer is duty bound to find patent, latent and glaring defects in the books of accounts while rejecting the Books of the assessee. The reliance placed by the ld. Counsel for the assessee in the decision of the Hon ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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