AO Can’t Sit on the armchair of Assessee to replace his business strategy by his own whims and fancies: ITAT

 

 

ACIT Versus Ashish Bansal
Case No.: ITA No.7427/Del/2018

Facts:
1. The department submitted that there was a significant rise in the turnover of the jewelry segment of the business, but there was a substantial reduction in the GP rate, which was very abnormal in the normal course of the jewelry business.

2. The department pointed out that in a similar trade with almost the same turnover, other traders in the market generally have a GP of around 1%, which clearly shows that there was a leakage of revenue in the business of the assessee from a tax angle.

3. The assessee submitted that as per the provisions of Section 145(3), where there is a doubt regarding the correctness or completeness of the books of accounts of the assessee or where the accounting method prescribed under the Act (cash or mercantile) or the income computation and standards prescribed under the Act have not been followed by the assessee, the A.O. may reject the books of accounts of the assessee. In this case, books of accounts were not rejected.

ITAT Delhi held as under:
1. The AO has not disputed the financial statements and books of accounts of the assessee, which were duly audited by the competent auditor.

2. There is no finding in the assessment order that the appellant has failed to submit requisition documentary evidence and explanation with respect to claims made in the return of income arising from books of accounts maintained by him.

3. AO cannot sit on the armchair of a businessman assessee to replace his business strategy with his own whims and fancies.

4. So appeal by the revenue is dismissed.

 

1685693812-ITA 7427 Ashish Bansal (1)