|COURT:||Bombay High Court|
|CORAM:||A. K. Menon J., S. C. Dharmadhikari J|
|CATCH WORDS:||casual, high-handed, Rejection of books of account|
|DATE:||September 25, 2014 (Date of pronouncement)|
|DATE:||November 7, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 145: AO is not entitled to reject books of account in a casual and high-handed manner|
The assessing officer has been faulted for not following section 145(3) of the Act. The tribunal has held that before the assessing officer records satisfaction about the correctness or completeness of the accounts of the assessee, he ought to have given proper opportunity to the assessee. The books of account could not have been rejected casually. The tribunal has held that rejection of books of account was not itself correct. It was not done by giving proper opportunity to the assessee. The rejection is high handed. There was an affidavit filed even before the Commissioner of Income Tax (Appeals) and the revenue did not controvert the contents thereof. However, the assessing officer made addition of gross profit and that was a matter clarified by the assessee in this Affidavit. The Commissioner of Income Tax has not uphold this gross profit addition. The comparison by the assessing officer and by looking at the very document, namely, the profit and loss account was improper. The tribunal has termed the approach of assessing officer as unfortunate. It is termed as arbitrary, high handed and cannot be sustained. Without examining the basic parameters for rejection of the books of accounts the revenue goes in appeal before the tribunal, this is what is faulted by the tribunal. To our mind, the complaint of the assessee before the tribunal was wholly justified. Not only did the assessing officer fail to record the requisite satisfaction in terms of section 145(3) but proceeded to make addition and that was estimate which was also not sound.