The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that there was defect and discrepencies in the books of account and thus upheld the decision of Commissioner of Income Tax (Appeals) [CIT(A)] in rejecting the books of account.
The assessee in this case is Mukesh Kumar, during the assessment proceeding the Assessing Officer (AO) has rejected the books of account of assessee. The AO has observed in the assessment order that the assessee has not maintained proper bills and vouchers in respect of various expenses claimed by him in the profit & loss account. Further, it was noted that the assessee has shown gross profit of Rs.33,95,447 on total sales of Rs.3.72 crore. The declared GP (Gross Profit) includes disclosed amount of Rs.31 lakhs during the survey action under Section 133A of the Income Tax Act.
Aggrieved by the order he filed an appeal before the CIT (A) challenging rejection of books and estimation of value of excess stock and thereby making addition of Rs. 31 lakh on account of stock by treating the same as alleged income of assessee.
The CIT (A) observed that the assessee has failed to give the particulars/details of the stock in terms of quantity and valuation. The assessee has also failed to substantiate its claim that inventory of the stock which has been valued at MRP(Maximun Retail Price) should have been valued on cost basis as the appellant could not co-relate the physical items with the respective bills/vouchers and also failed in substantiating the valuation of closing stock as shown at Rs.76,90,708.
Accordingly income of the assessee under the head business/profession is determined at Rs. 11,53,200 as against Rs.63.40,752 assessed by the AO, Rs.32,87,473 shown by the appellant. Further, income disclosed on account of stock and cash discrepancies of Rs.40 lakhs during the survey action and disclosed in the return of income is directed to be assessed as income from other sources as the same are deemed income falling within the Section 69/69A of the Income Tax Act. The AO was further directed to charge special rate of tax as provided under Section 115 BBE of the Income Tax Act in respect of income of Rs.40 lakhs.
Further aggrieved the assessee filed an appeal before the Tribunal. The assessee has challenged that the authorities below have not given opportunity of being heard to the assessee.
The Bench comprising of Chandra Mohan garg, Judicial Member and Dr. B.R.R. Kumar, Accountant Member noted that from the assessment order the assessee was represented by Anil Garg, Advocate who attended proceedings from time to time on behalf of assessee, from CIT(A) order it was observed that the CIT(A) took on record written submissions of assessee and the same represented the case.
Thus the Tribunal held that it disaggree with the contention of assessee that he was not given due opportunity of hearing before the authorities below.Therefore the Bench on careful perusal of assessment as well as first appellate order upheld the order of CIT(A) that the AO was justified in rejecting books of accounts of assessee under Section 145(3) of the Income Tax Act as there was number of defects and discrepancies.
Hence , dismissed the ground of appeal by assessee.
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