![Defects in Third Party Accounts would not Trigger Rejection in Assessee’s Case](https://itatonline.org/digest/wp-content/uploads/2018/04/default-image-thmb.png)
An austere reading of section 145(3) of the Act, envisages existence of three situations where assessing officer can resort to reject the books of account of assessee. And one of such situation with which we are concerned in the present appeals is satisfaction of the assessing officer about incorrectness or incompleteness of the accounts of the assessee.
Going by the principles of stricter interpretation laid by the Hon’ble Apex Court in ‘Commission of Customs Vs M/s Dilip Kumar And Co. & Ors’ reported in 9 SCC 1 (2018) in our considered view;
1. the books of assessee can only be rejected if the assessing officer is not satisfied about the correctness or completeness of assessee’s accounts and in no case the correctness or
completeness of other person’s accounts with whom the assessee had any transaction would empower the assessing officer to reject the books of the assessee.
2.The rejection can only be triggered or considered when accounts are found incorrect or incomplete, that is to say incorrectness or incompleteness of substantial accounts shall only form reasonable satisfaction for rejection of books. A single account with insignificant error or incorrectness or incompleteness would in no case sufficient to form basis for rejection of entire books of accounts.
3. The incorrectness or incompleteness should reasonably be brought on records and it should alone be capable of reasonableness to form rational basis for rejection of books.
4. There cannot be wholesale rejection of books for more than one assessment years on the basis of accounts of particular year, because such incorrectness and incompleteness of one set of books cannot be determinant factor for any other year.
About the Author: Jayesh Sahah B.Com, FCA,PGDBM (UOM) cashahjayesh@gmail.com
Pdf file of article: Click here to Download
Posted on: June 30th, 2023
Leave a Reply