2018 (11) TMI 437 - AT - Income Tax

300% addition qua Business Income - Business Income declared in the tentative financial statements filed - in present assessment year neither the return has been filed nor the books have been audited - Held that - Revenue has made addition of ₹ 1,93,10,202/- on mere estimation. We are in agreement with the view of the Commissioner of Income Tax (Appeals) that the facts of the present case are at variance as no audited accounts have been furnished by the assessee and there is no tax audit report u/s. 44AB of the Act. The income declared by the assessee in tentative financial results does not carry any sanctity, therefore, the ratio applied in A.Y. 2007-08 would not hold in good in A.Y. 2008-09. At the same time we are of considered view that 300% addition made by Revenue authorities is very much on the higher site. Taking into consideration entirety of facts we restrict the addition to 200% of the Business Income declared in the tentative financial statements filed by the assessee. Accordingly, ground Nos. 1 and 2 raised in the appeal by the assessee are partly allowed. MAT computation - authorities below have not considered the book profit declared by the assessee under MAT provisions i.e. u/s. 115JB - Held that - Remit the ground for computing the taxable income after considering the addition confirmed by the Tribunal vis- -vis the book profits declared by the assessee under the provision of section 115JB. Addition to 15% of the income from house property - Held that - Commissioner of Income Tax (Appeals) in the impugned order has observed that the assessee while computing income under the head Income from house property has claimed staturoty deductions only. The ld. DR has not been able to substantiate infirmity in the order of First Appellate Authority. Accordingly, the ground No. 1 raised in the appeal by the Revenue is dismissed being devoid of merit.

Summary

Issues:
- Dispute over assessment of business income
- Dispute over assessment of income from house property
- Applicability of Section 115JB
- Violation of Rule 46A

Analysis:
1. Dispute over Assessment of Business Income:
The case involved cross-appeals by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2008-09. The assessee company, managed by two brothers with serious differences, failed to finalize accounts and comply with tax provisions. The Assessing Officer estimated income due to non-compliance. The Commissioner of Income Tax (Appeals) confirmed the addition of 300% to business income. The assessee disputed this, citing previous year's decision. The Tribunal upheld the Commissioner's decision but reduced the addition to 200% due to lack of audited accounts and tax audit report.

2. Dispute over Assessment of Income from House Property:
The Revenue appealed the restriction of addition to 15% of income from house property. The Commissioner observed statutory deductions were claimed, finding no merit in the Revenue's appeal. The Tribunal dismissed the Revenue's appeal on this ground.

3. Applicability of Section 115JB:
The assessee raised concerns about not considering book profit under Section 115JB. The Tribunal remitted this issue to the Assessing Officer for recomputation after granting partial relief on other grounds.

4. Violation of Rule 46A:
The Revenue alleged violation of Rule 46A regarding additional evidence. However, no fresh documents were filed before the Commissioner of Income Tax (Appeals). The Tribunal dismissed the Revenue's appeal on this ground.

In conclusion, the Tribunal partly allowed the assessee's appeal and dismissed the Revenue's appeal. The decision was based on detailed analysis of each issue, considering compliance, previous decisions, and statutory provisions.