#Section 145(3) IT Act

The ITAT Jaipur deleted a Rs. 40.82 lakh addition for unexplained cash deposits, ruling that mere deviations in cash sales or bank deposits-even amid demonetization-are insufficient to reject duly audited books of accounts. This reinforces that tax authorities must identify specific, material defects in accounting records, not rely on speculative patterns, protecting compliant businesses from arbitrary assessments.

ITAT Bangalore struck down an 8% ad hoc disallowance of transportation expenses, holding that consistent banking records and the commercial reality of the business outweigh the absence of formal vouchers. This sets a critical precedent for transporters and logistics firms relying on digital payment trails to substantiate legitimate operational costs in tax assessments.

ITAT Agra holds that under Section 145(3) of the Income-tax Act, the Assessing Officer cannot partially reject books of accounts; if rejected, net profit must be estimated on the entire turnover. This ruling reinforces the strict interpretation of the provision, impacting taxpayers whose books are scrutinized for defects.

ITAT Ahmedabad rules that additions under Section 145(3) of the Income Tax Act cannot be sustained based solely on VAT discrepancies without verifying rectified reports. The tribunal emphasises that bona fide errors must be reconciled before imposing tax additions, protecting taxpayers from arbitrary penalties.

ITAT Panaji upholds the rejection of books under Section 145(3) of the Income Tax Act due to non-production of vouchers and audit records, affirming additions for unexplained cash deposits and underreported business profits. The ruling reinforces that failure to substantiate claims with documentary evidence empowers tax authorities to make best judgment assessments, impacting traders and businesses with inadequate record-keeping.