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2019 (1) TMI 1125 - AT - Income TaxRejection of books of accounts - lack of submissions of the details and books by the assessee - books of account rejected in absence of assessee s cooperation and his observation that the proper details were not submitted - Held that - CIT(A) has passed a very contradictory order without any reference to the examination of the actual books of account. He has upheld the A.O. s order for lack of appearance and co-operation by the assessee and the validity of assessment framed u/s. 144. Then he has taken a divergent stand that the rejection of the books was not proper and the additions made were liable to be deleted without any actual verification of books. We note that the assessee had submitted that the assessee had not received the last notice hence it was pleaded that the proper opportunity was not given to the assessee. CIT(A) without referring to the examination of the books of account despite his coterminous power has deleted all the disallowance. Neither the assessment can be framed de hors the facts and figures nor the same can be deleted by only theoretical explanation by the assessee and the ld. CIT(A). In our considered opinion on the facts and circumstances of the case in the interest of justice the issue in this appeal needs to be remitted to the file of the A.O
Issues Involved:
1. Rejection of Books of Accounts 2. Disallowance of Operational and Administrative Expenses 3. Best Judgment Assessment 4. Delay in Filing Appeal Detailed Analysis: 1. Rejection of Books of Accounts: The Revenue challenged the decision of the learned Commissioner of Income Tax (Appeals) [CIT(A)] for reversing the Assessing Officer's (AO) rejection of the books of accounts. The AO had rejected the books under section 145(3) of the Income Tax Act, 1961, due to the assessee's non-compliance in providing necessary details despite multiple notices. The AO relied on several legal precedents to justify the rejection. The CIT(A), however, found the AO's action unjustified as the assessee had submitted the required details, and the AO did not point out any specific defects in the accounts. The CIT(A) ruled that the rejection of the audited accounts was without merit. 2. Disallowance of Operational and Administrative Expenses: The AO disallowed 50% of the operational and administrative expenses, depreciation on fixed assets, and other financial items, citing a lack of verification. The AO's decision was based on the premise that the assessee failed to prove the genuineness and necessity of these expenses for business purposes. The CIT(A) disagreed with the AO, stating that the disallowances were made without proper examination and deleted all the disallowances. However, this decision was contradictory as the CIT(A) upheld the AO's assessment under section 144 but simultaneously invalidated the disallowances without verifying the actual books of account. 3. Best Judgment Assessment: The AO completed the assessment ex parte under section 144 due to the assessee's non-compliance and lack of cooperation. The assessee argued that it had complied with the notices and submitted relevant information. The CIT(A) upheld the AO's action of framing the assessment under section 144, noting the assessee's casual approach and deliberate avoidance of proceedings. However, the CIT(A) also contradicted this by deleting the disallowances without examining the books of account. 4. Delay in Filing Appeal: There was a delay of 24 days in filing the appeal, which was condoned by the tribunal upon hearing the reasonable cause attributed for the delay and after considering both counsels' arguments. Conclusion: The tribunal found that neither the AO nor the CIT(A) conducted a proper examination of the books of account. The AO's assessment and the CIT(A)'s deletions were both based on inadequate verification. The tribunal remitted the issue back to the AO for a thorough examination of the books of account, directing the assessee to cooperate fully. The tribunal emphasized that the assessment should be based on factual verification rather than theoretical explanations. Both the appeal by the Revenue and the cross objection by the assessee were allowed for statistical purposes.
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