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During the course of assessment proceedings, the assessee was asked to submit his books of accounts and he has admitted to have not maintained any day to day stock register, sales vouchers, expenses vouchers and as a result, the AO has held that the sales and other expenses are not verifiable and the books of accounts maintained by the assessee were held not reliable and were rejected by the Assessing Officer by invoking the provisions of section 145(3) of the Act.

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Sec. 145(3) of Income Tax Act, 1961— Rejection of books of accounts —Maintenance of stock register is essential not just for determining the opening and closing stock but for establishing the necessary linkage with the goods purchased and sold during the year and assessee may plead for non-maintenance of sale bills being involved in retail sale of liquor however, at the same time, the assessee cannot plead non-maintenance of stock register, infact, where the assessee plead that the purchases are verifiable, then what stops him from producing the records of such purchases and its linkage with the sales made during the year out of such purchases, further, being the first year of operation cannot be a ground for non-maintenance of proper books of accounts, therefore, in the entirety of facts and circumstances of the case, the rejection of books of accounts under section 145(3) was justified - KAMAL KUMAR V/s ITO - [2020] 27 ITCD Online 008 (ITAT-JAIPUR)