Samwon Precision Mould Mfg. (India) P. Ltd. vs. ITO (ITAT Delhi)

“The above factual aspects have not been denied by the CIT(A), however, he has held that the issues are not insignificant mistakes or issues which are not relevant and the nature of mistakes and discrepancy are of serious nature and, therefore, cannot be ignored. We, however, neither support the conclusion, on the contrary castigate such an arbitrary approach of the authorities below in the facts of the case. The assessee is a company having declared a turnover of Rs.44.45 crores and profit thereon of Rs.1.65 crores. The books of accounts are duly audited and no defect has been pointed out vis-a-vis the sales, purchase or profit.”

“It is a subsidiary of a Korean Company and, therefore, the authorities below had to be circumspect before arriving at such a conclusion, particularly when there is no iota of material to doubt the quantitive details, audited results vis-a-vis the turnover and profit declared so as to warrant rejection. Instances of irregularities in cash payment cannot warrant ipso facts rejecting of books of accounts, at best disallowance could have been made u/s 40A (3) of the Act. We, therefore, hold that the books of accounts were incorrectly rejected as it is not a case where it can be held that the books of account was incorrect or incomplete or correct profits could not be deduced. On the contrary, we find that completed audited books of accounts were produced before the AO, which were duly examined and such book of accounts have not been shown to have been maintained from where correct profits could not be deduced, thus vitiating the entire action of the AO and CIT(A) for rejecting the books of account.”