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2022 (4) TMI 282 - AT - Income TaxRevision u/s 263 by CIT - ad hoc disallowance of expenses claimed - HELD THAT - We clearly observe that the AO has not rejected books of account of the assessee but has made disallowance of 10% of claim of expenses on account of failure of the assessee to produce details of bills and vouchers in support of such claim of expenses made in the profit and loss account. Therefore, the contention that no further addition can be made on the basis same account, being devoid of merits, is dismissed. So far as non-consideration of reply to notice u/s. 263 on careful and vigilant reading of order dated 30.3.2014 u/s. 263 of the Act, we are of the considered view that the CIT has given thoughtful consideration to the submission of the assessee and also noted that the Ld. A.R. has not given any specific explanation with respect to issues raised in the show cause letter issued for initiation of proceedings u/s. 263. In view of this, the legal contention of the assessee as placed in Ground cannot be held as allowable and the same are also dismissed being devoid of merits. We find it just and proper to direct the AO to consider the contention, Explanation and relevant documentary evidences during reassessment proceedings in pursuance to order u/s. 263 by the AO and also during first appellate proceedings by the CIT(A). The CIT(DR) did not object to the prayer of the assessee for giving above direction to the AO.
Issues:
- Appeal against order of CIT under section 263 for assessment year 2009-2010. - Recalling of appeal for fresh consideration. - Grounds raised by the assessee. - Additional ground of appeal. - Allegations by CIT regarding liabilities and sales tax. - CIT's decision to set aside assessment order. - Adjudication of grounds by the Tribunal. - Disallowance of expenses and rejection of accounts. - Non-consideration of reply to notice under section 263. - Two possible views on an issue. - AO's estimation of expenses and rejection of books of account. Detailed Analysis: The appeal was filed against the CIT's order under section 263 for the assessment year 2009-2010. The Tribunal initially decided the appeal on 10.5.2018 but later recalled it for fresh consideration on 4.2.2022. The assessee raised various grounds challenging the legality and basis of the CIT's order. An additional ground was also raised regarding the communication of the order under section 263 being a condition precedent. The CIT alleged discrepancies in the liabilities and sales tax deductions, leading to the initiation of proceedings under section 263. The CIT set aside the assessment order and directed the AO to re-examine the issues raised in the show cause notice issued under section 263. The Tribunal adjudicated the grounds raised by the assessee, dismissing certain grounds as they had already been addressed in the previous order. The issue of estimation of expenses and rejection of accounts was discussed, with the CIT arguing that the AO had not rejected the books of account but had made ad hoc disallowances due to lack of supporting documentation. The Tribunal observed that the AO had not rejected the books of account but had made disallowances based on insufficient documentation. The Tribunal also noted that the CIT had considered the submissions of the assessee and found no specific explanation regarding the issues raised in the show cause notice under section 263. The Tribunal dismissed the contentions related to non-consideration of the reply to the notice. The Tribunal directed the AO to consider all contentions, explanations, and evidence during reassessment proceedings and first appellate proceedings, providing the assessee with a fair hearing. In conclusion, the appeal of the assessee was dismissed, and the Tribunal directed the AO to consider all relevant aspects during reassessment, ensuring a fair opportunity for the assessee to present their case.
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