Books of Accounts cannot be rejected only for want of tax audit report: ITAT

In the matter of DCIT vs M/s. Maa Umiya Agritech Pvt. Ltd. Indore Income Tax Appellate Tribunal (ITAT) has noted that it is only a case where accounts were not correct or incomplete or the method of accounting employed by the assessee is not such as to enable the AO to determine the income properly then can resort to the provisions of section 145(3) or 144 of the Act. In the absence of any major discrepancies or defects in the books of accounts, the rejection of the books of account only for want of tax audit report is not justified.

The Tribunal also said that it is specifically noted that the remedy for non-filing of the tax audit report is to initiate separate proceedings under Income Tax Act but when all other documents and books of account are maintained and statutory audit reports were filed to show that books of account have been audited by the auditor then the AO ought to have examined books of account and supporting evidence.

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