#Books of Accounts

The ITAT Delhi has struck down a 35% ad hoc addition under Section 68, ruling that mere suspicion of unexplained cash deposits during demonetization cannot substitute for concrete evidence of bookkeeping defects. This reinforces that tax authorities must identify specific irregularities in accounts - not rely on broad assumptions - when taxing cash inflows, protecting honest taxpayers in the informal sector from arbitrary assessments.

The ITAT Kolkata ruled that the Assessing Officer cannot disallow purchases and make a blanket addition merely because the assessee failed to respond to Section 133(6) notices. The burden lies on the department to identify concrete discrepancies in the books, not to penalize silence. This protects taxpayers from arbitrary assessments and reinforces procedural fairness in income tax scrutiny.

Madras High Court mandates that Assessing Officers must formally reject an assessee's books of accounts before relying on a District Valuation Officer's report for escaped income assessment. The ruling clarifies that mere presumption of escapement without procedural compliance invalidates the valuation, reinforcing natural justice in tax proceedings.

ITAT Delhi holds that search proceedings cannot override maintained books of accounts; profit suppression must be estimated at market-consistent rates, not disallowed in full.