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ITAT remanded matter to AO to re-examine books of account
ITAT remanded matter to AO to re-examine books of account
Assessee was into trading of PVC Film etc, and declared total income at Rs 9,89,310. On scrutiny, AO observed that there was fall in GP rate by 5.19% and assessee was not maintaining day to day stock register and major portion of purchases were made from parties covered u/s 40A(2)(b) (of Income Tax Act, 1961). AO rejected books of accounts and adopted GP rate of 6.5%, and made addition. CIT(A) upheld AO’s order. ITAT remanded matter to AO to re-examine books of account.-501657
1. The assessee company was into trading of PVC/BOP/Polyster Film etc.
2. It filed its e-return showing total income at Rs.9,89,310.
3. On scrutiny, AO observed that there was fall in gross profit rate by 5.19% and that assessee was not maintaining day to day stock register and major portion of purchases were made from parties covered u/s 40A(2)(b) (of Income Tax Act, 1961).
4. AO observed that average sale price decreased in comparison to that of preceding year whereas average purchase price increased in comparison.
5. AO concluded that the books of accounts were not correct and rejected the same u/s 145(3) (of Income Tax Act, 1961) and adopted GP rate of 6.5% as against GP rate of 3.53% shown by the assessee, and made addition.
6. CIT(A) upheld the AO’s order.
On appeal, the ITAT held as under:
7. It would be just and proper to set aside the issue to the file of Assessing Officer to re-examine the books of account of assessee along with day to day stock register maintained by assessee.
8. As far as purchases from related party u/s 40A(2)(b) (of Income Tax Act, 1961) is concerned assessee needs to furnish all related documents to justify that the purchases of s. 41389051/- have been made at the prevailing market price and no effort was made to book purchases at inflated Asst. Year 2007-08 rate.
Case Reference - M/s New Gujarat Polyplust P. Ltd Vs. DCIT.
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD ''C " BENCH - AHMEDABAD
Before Shri Rajpal Yadav, JM, & Shri Manish Borad, AM.
ITA No.1880/Ahd/2010
(Asst. Year:2007-08)
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