Tax Law : An Important Decision on "Pick and Choose"

 Tax Law : An Important Decision on "Pick and Choose"

PCIT v. Forum Sales Pvt Ltd [2024] GCtR 634 (Delhi)

It has been held that books of account have to be necessarily rejected before the AO proceeds to the best judgment assessment upon fulfilment of conditions mentioned in the Income-tax Act, 1961. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee.