Section 145 of Income Tax Act, 1961— In the instant case, revenue challenges the order passed by ITAT on the following ground—

1. Whether the tribunal was justified in holding that in the absence of any defect being pointed out in the records, the invocation of Section 145(3) of the Act was not proper?
2. Whether tribunal is justified in deleting, without any valid and cogent material/ reasons against the findings of suppression of Sales by the CIT(A), the addition of Rs. 5,30,80,200/- made by the CIA(A) on account of understatement of sales?

Held that— the Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of accounts to disregard the same. We note that CIT(A) in his order while rejecting the Books of Account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the Respondent’s records which would warrant rejection of books and making a Best Judgment Assessment.

Held that—The Revenue has not made any reference even remotely that the Respondent had received amounts in excess of that shown in the agreements in respect of twelve flats which is not being accepted. The entire case of the Revenue is merely on suspicion. It is not the case of the Revenue that the Respondent made secret profits out of sale of the twelve flats.[PR. COMMISSIONER OF INCOME TAX-3. VERSUS M/S. SWANANDA PROPERTIES PVT. LTD.] [2019] 17 ITCD Online (40) [BOMBAY HIGH COURT]