Assessing Officer cannot Estimate Income If the Books of Accounts are Correct: ITAT [Read Order]

In the case of ACIT vs. Balajee Structural (India) Pvt.Ltd, Raipur bench of ITAT held that Assessing Officer (AO) cannot estimate income if the books of accounts are Correct.

The bench comprising of Judicial Member Pavan Kumar Gadale and Accountant Member N.S Saini, was held while considering the appeal filed by the Revenue against the order of the CIT (A) for the assessment year 2010-2011.

In the instant appeal, assessee contended that the CIT (A) has not upheld the action of the AO in rejecting books of account u/s. 145(3) of the Act on the ground that merely because the quantity of raw material consumed and finished goods produced have been quantified with some degree of estimation, the books of account cannot be said to be unreliable or prone to rejection.

Aggrieved, the Revenue carried the matter before the Tribunal and contended that the appellate authority had made a crystal clear statement that if the books off accounts are correct then there should not be any estimation to the income is not tenable by the AO.

Finally the tribunal bench declared that when rejection of books of account by the AO u/s.145(3) is not sustained by the CIT(A), there is no ground to estimate the income by the AO.