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Deputy Commissioner Of Incom Tax vs M/S Pushpak Merchants Pvt. Ltd. Vandana ... on 21 March, 2018

21. We find that neither the AO nor the ld.CIT(A) has rejected the books of account maintained by the assessee by invoking the provisions of section :-14-: ITA. No.4013/Chny/2025 145(3) of the Act. In the absence of rejection of books and without disproving the quantitative records maintained by the assessee, the sales entered in the regular books cannot be selectively treated as non-genuine merely on the basis of suspicion or surrounding circumstances. The AO proceeded mainly on the premise that the assessee could not have effected such huge volume of sales within a short period of time immediately after the announcement of demonetisation on 08.11.2016 and therefore invoked the theory of human probabilities by placing reliance on the decision of the Hon'ble Supreme Court in CIT v. Sumati Dayal. However, the theory of human probabilities cannot be applied in isolation disregarding direct documentary evidences available on record. The assessee has placed contemporaneous evidences including newspaper reports and business records demonstrating extraordinary rush in jewellery shops across Chennai immediately after the demonetisation announcement. The abnormal surge in jewellery purchases during the relevant period is a matter of public knowledge and therefore the mere quantum of sales cannot by itself lead to the conclusion that the transactions were fictitious.
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