Reject'n of books of a/c of assessee by AO held not justified by ITAT.

Facts in Brief:

1. Assessee, a proprietor was engaged in manufacturing and trading in ready-made garments.

2. The AO found from the return of income and details thereof that there are outstanding sundry creditors.

3. The AO noted that even, after providing sufficient opportunities and time the assessee failed to provide the necessary details for proving their genuineness in respect of the remaining 25 parties.

4. AO finally made addition of Rs. 35,13,739/- u/s.41(1) (of Income Tax Act, 1961).

5. On appeal CIT(A) called for the remand report from AO and observed that out of Rs.35,13,739/- assessee failed to furnish proof of creditors in respect of Rs.23,34,721/- and proved the creditors only in respect of Rs.11,79,018/- and as such he has sustained addition of Rs.23,34,721/- .

6. Against this decision of CIT(A), assessee filed appeal before HC.

It was held as under:

7. In such circumstances in our opinion, in this case rejection of books of account of the assessee is not justified. However, there is certain discrepancy noticed by the authorities in the course of first appellate proceedings. Accordingly, in our opinion instead of adhoc estimation, we are inclined to sustain the disallowance in respect of expenses incurred in cash and no bills or vouchers were produced by the assessee for verification namely conveyance expenses, Rs.75,710/-, general expenses Rs.69,361/-, motor car expenses Rs.48,000/-, telephone expenses Rs.20,052/-. Accordingly we sustain these additions and the ground of the assessee is partly allowed.

8. In the result, appeal is partly allowed.

Case Reference-Bharat Dana Bera v. Income-tax Officer, Ward 19(1)(3), Mumbai

IN THE ITAT MUMBAI BENCH 'B'