9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 996 - AT - Income TaxNon satisfaction of pre-requisites of a speaking order by CIT-A - Shortage of fabric - HELD THAT - A perusal of brief finding recorded by the CIT(A) would reveal that the CIT(A) has not considered any material on the record as well as arguments of the assessee pleaded in the written submissions. Thus, the impugned order cannot be branded as a speaking order. At this stage, we would like to make reference to the judgment of Roadmaster Industries of India P.Ltd. Vs. ACIT, 2006 (5) TMI 86 - PUNJAB AND HARYANA HIGH COURT as considered large number of judgments at the end of Hon ble Supreme Court as well as at the end of Hon ble High Courts in order to propound why reasons are necessary in support of conclusions of any adjudicating authority. If we visualize written submissions and finding given by the ld.CIT(A), then it is apparent that such finding does not contain any adjudication on the submissions of the assessee and not sustainable. We set side finding of the ld.CIT(A) on this issue in both the three years. We restore this issue to the file of the ld.CIT(A) for re-adjudication. Disallowance of foreign travel expenses - HELD THAT - As emerges out from the record that the expenses were incurred on travel of Smt.Sayraben Bagrecha for a trip to Hong Kong. She is not an employee. No evidence of technical, professional qualification of Smt.Sayraben was filed. Therefore, the assessee failed to establish that these expenses were incurred for the purpose of business. Considering the finding recorded by the ld.Revenue authorities, we do not find any merit in these grounds of appeal in both the years. Profit estimation - Non rejection of books of accounts - HELD THAT - income has to be computed in accordance with the method of accountancy followed by an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time. Sub clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income. On the basis of method of accountancy followed by an Assessee than he can reject the book result and the assessee s income according to his estimation or according to his best judgment. The Assessing Officer in that case is required to point out the defects in the accounts of Assessee and required to seek explanation of the Assessee qua those defects. If the assessee failed to explain the defects than on the basis of the book result, income cannot be determined and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. - Both the authorities have not taken into consideration whether any justifiable reasons are there for such lowering down of the profit. Since, order of the ld.CIT(A) is totally silent on this aspect, and she has not discussed the submissions of the assessee, therefore, we deem it appropriate to set aside this issue to the file of the ld.CIT(A) for re-adjudication.
Issues Involved:
1. Disallowance of cash payment to contractors. 2. Addition on account of unaccounted sales/merchandisers. 3. Disallowance of foreign travel expenses. 4. Shortage of stock of yarn. 5. Estimation of net profit and rejection of books of accounts. Detailed Analysis: 1. Disallowance of Cash Payment to Contractors: The Revenue challenged the deletion of additions made by the AO for the disallowance of cash payments to contractors amounting to ?8,10,850/- and ?8,95,670/- for the assessment years 2009-10 and 2010-11 respectively. The AO made these disallowances based on seized documents indicating inflated labor payments. The Tribunal upheld the AO's disallowance, noting that similar disallowances were upheld in previous years (2007-08 and 2008-09). Thus, the Tribunal found no error in the CIT(A)'s decision to confirm these additions. 2. Addition on Account of Unaccounted Sales/Merchandisers: The AO made additions of ?1,38,03,648/- and ?67,08,014/- for unaccounted sales based on seized documents showing discrepancies in stock records. The assessee argued that the shortages were within the agreed ratio of losses for job work and were recorded in the Tally Software before the search. The CIT(A) summarily rejected the assessee's explanations without detailed consideration. The Tribunal found that the CIT(A) failed to provide a reasoned decision and remanded the issue back to the CIT(A) for re-adjudication with proper consideration of the assessee's submissions. 3. Disallowance of Foreign Travel Expenses: The Revenue contested the deletion of disallowance of foreign travel expenses amounting to ?48,812/- and ?1,07,031/-. The expenses were incurred for a trip by Smt. Sayraben Bagrecha, who was not an employee, and no evidence of her technical or professional qualifications was provided. The Tribunal upheld the disallowance, agreeing with the Revenue authorities that the assessee failed to establish the business purpose of these expenses. 4. Shortage of Stock of Yarn: The AO added ?67,08,014/- for the shortage of stock of yarn based on seized documents. The assessee argued that the shortages were normal and within the agreed ratio for job work. The CIT(A) dismissed the assessee's explanations without detailed analysis. The Tribunal found the CIT(A)'s order to be non-speaking and remanded the issue back for re-adjudication, emphasizing the need for a reasoned decision. 5. Estimation of Net Profit and Rejection of Books of Accounts: The AO rejected the assessee's books of accounts and estimated a net profit of 4% on sales, resulting in an addition of ?1,83,94,205/-. The assessee argued that no defects were pointed out in the books, and the reasons for the lower profit after the search were not considered. The CIT(A) upheld the AO's estimation without addressing the assessee's submissions. The Tribunal found that both the AO and CIT(A) failed to consider the justifiable reasons for the lower profit and remanded the issue back to the CIT(A) for re-adjudication with proper consideration of the assessee's explanations. Conclusion: The Tribunal dismissed the Revenue's appeals due to low tax effect and partly allowed the assessee's appeals and cross objections, remanding several issues back to the CIT(A) for re-adjudication with a directive to provide reasoned decisions. The Tribunal emphasized the necessity of reasoned orders to ensure fairness and transparency in the adjudication process.
|
