The Chandigarh Bench of the Income Tax Appellate Tribunal ( ITAT ) held that, the assessee cannot be said to have not maintained stock register and books of accounts on account of not uploading them in the Income Tax Portal that does not allow bulk uploads and allowed manual submission of the required documents.
After a show cause was issued to the assessee as to why the books of account should not be rejected by invoking the provision of Section 145(3) of the Income Tax Act, taking into consideration the submissions of the assessee which were not found acceptable, the books of accounts were rejected.
Also taking into consideration the past history of the assessee, the Assessing Officer (AO) applied average Gross Profit rate of the last three years at 3.13% as against G.P. rate of 0.55% declared by the assessee and an addition of Eighty-Four Lakh Rupees was made via assessment order.
The assessee submitted that it was wrong on the part of the AO to reject and on the part of the Commissioner of Income Tax(Appeals), National Faceless Assessment Centre to confirm the rejection of books of accounts.
During the course of hearing, on behalf of the assessee, CA Parveen Jindal submitted that the sole reason for rejection of books of accounts under Section 145(3) of Income Tax Act and estimating the profit by the AO was that the assessee was not maintaining day to day stock registers with quantitative details.
It was further submitted that the AO has wrongly held in the assessment order that bills and vouchers were not produced by the assessee and therefore, the AO has wrongly concluded that the assessee is not maintaining complete and proper books of account along with bills and vouchers and has going ahead and rejected the books of account by invoking the provision of Section 145(3) of the Income Tax Act.
The Department representative Akashdeep, Joint Commissioner of Income Tax submitted that the AO was right in law in calculating the Gross Profit rate as per various judgements of the High Courts and benches of the Tribunal.
It was observed by the tribunal comprising Vice President Aakash Deep Jain and Accountant Member Vikram Singh Yadav that, “where the assessment has been conducted through a virtual electronic platform, it may not be feasible to submit and upload the voluminous books of account, sale / purchase register, cash book, and other ledger account along with bills and vouchers, TDS return etc. as so desired by the AO”.
It was also noted that the said contention has also not been rebutted by the Revenue.
The Tribunal observed that, the AO has the right to examine the books of accounts that the representative for the assessee had stated at the Bar that if so allowed, the assessee shall produce the books of accounts before the AO for necessary verification and set-aside the matter to the AO for fresh examination of documents that may be physically submitted by the assessee.
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