2013 (10) TMI 1334 - AT - Income Tax

Summary

Issues Involved:
1. Determination of assessable income for A.Y. 1994-95.
2. Levy of interest u/s 234B.
3. Deletion of additions by CIT(A) for A.Y. 1994-95.
4. Rejection of books of accounts and estimation of sales and gross profit for A.Y. 1996-97.
5. Deletion of additions by CIT(A) for A.Y. 1996-97.

Summary:

1. Determination of Assessable Income for A.Y. 1994-95:
The assessee, a dissolved partnership firm, filed two separate returns for A.Y. 1994-95. The assessing officer combined the income of both periods, rejected the books of accounts, and assessed income at Rs. 1,24,12,962/-. The CIT(A) held that both partnership firms were distinct and should be assessed separately, reducing the assessed income and apportioning it between the two periods. The final income for the first period was determined at Rs. 1,83,770/-.

2. Levy of Interest u/s 234B:
The assessee contended that no interest u/s 234B could be levied as there was no specific order for charging the interest. The CIT(A) was required to decide the issue of interest u/s 234B himself instead of remanding it to the assessing officer.

3. Deletion of Additions by CIT(A) for A.Y. 1994-95:
The CIT(A) deleted the addition of Rs. 35,23,115/- made by the assessing officer, holding that the income for the first period should be assessed at Rs. 1,83,770/- instead of Rs. 37,06,885/-. The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s decision that the combined original assessment order was non est and barred by limitation.

4. Rejection of Books of Accounts and Estimation of Sales and Gross Profit for A.Y. 1996-97:
The assessing officer rejected the books of accounts, estimating sales at Rs. 2.60 crores and making an addition of Rs. 4,07,355/- by applying a gross profit rate of 25.14%. The CIT(A) upheld the rejection of books but reduced the addition, deleting the addition of Rs. 83,25,708/- for unrecorded purchases and Rs. 16,85,743/- for lower gross profit rate.

5. Deletion of Additions by CIT(A) for A.Y. 1996-97:
The CIT(A) deleted the addition on account of unrecorded purchases and lower gross profit rate, holding that the assessing officer's exercise was based on assumptions and not justified. The ITAT upheld the CIT(A)'s order, dismissing the revenue's appeal and allowing the assessee's appeal in part.

Conclusion:
The ITAT allowed the assessee's appeal for A.Y. 1994-95 and partly allowed the appeal for A.Y. 1996-97. The revenue's appeals for both assessment years were dismissed. The charging of interest u/s 234B was held to be consequential.