16 December 2009
IT Department issued notice u/s 133(6)to the unsecured loans (lenders) and creditors of the assessee for confirmation of account balance of and did not receive the reply from some of such parties, so the ITO wants to reject the books of accounts. Is it the valid ground for rejection of books of accounts? please provide case laws with your suggestion if any.
16 December 2009
ITO is not correct to reject the books of account in the given circumstances.
If books of account are not regularly maintained from which profits cannot be computed properly only then he can reject the books of account.
Since in your case; loans and creditors are not confirmed by the third parties; it cannot be said the books of account maintained are wrong.
There are lots of case law. If ITO rejects; we have to see on what grounds he has rejected the books. Accordingly; appeal can be filed.
But; don't forget that now provisions are such that if any demand is raised by him due to assessment order passed; you may be required to pay demand. Although stay order can be taken against that.
Better you hire services of some expert in the matter.
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