2022 (7) TMI 810 - AT - Income Tax

Best judgment assessment u/s 144 - HELD THAT - We find that the authorities below have given sufficient opportunities to the assessee. The assessee failed to comply with the directions given by the assessing authority from time to time. Therefore, in the absence of compliance of such directions and not furnishing the evidences, the AO was justified in proceeding and passing best judgment order u/s 144 of the Act. Ground nos. 1 2 are, therefore, rejected. GP estimation - disallowance on account of proportionate interest expenditure and depreciation - HELD THAT - We find that no evidence has been placed on record by the assessee to substantiate its claim of expenses and depreciation as claimed before the AO. It was incumbent upon the assessee to substantiate its claim by filing evidences. No explanation had been offered regarding reliability of the accounts. Assessing Officer categorically recorded finding regarding unreliability of accounts on account of the fact that the auditors refused to put their signatures on the audit report. The assessee failed to justify its stand. In the absence of relevant evidences, we do not see any reason to interfere in the findings of the authorities below. We, therefore, uphold the orders of authorities below and reject the grounds raised by the assessee.

Summary

Issues Involved:
- Legality of the order passed by the learned CIT(A)
- Adequacy of opportunity given to the assessee
- Confirmation of various additions and disallowances made by the Assessing Officer

Legality of the Order and Opportunity Given:
The appeal was directed against the order of the learned CIT(Appeals) pertaining to the assessment year 2011-12. The appellant raised grounds challenging the legality of the order, alleging a lack of proper opportunity to be heard, and errors in confirming the Assessing Officer's actions without findings on the merits. The Assessing Officer proceeded with assessment under Section 144 due to the auditors' refusal to sign the audit report and the assessee's failure to provide necessary details, resulting in the computation of income and additions.

Confirmation of Additions and Disallowances:
The Assessing Officer made various additions, including estimating income tax at 3% of total turnover, disallowing interest expenditure, outstanding liabilities, liabilities to overseas corporate bodies, credit balance, depreciation, and expenditure incurred. The Assessing Officer also invoked Section 14A for disallowances. The learned CIT(A) dismissed the appeal, upholding the additions made by the Assessing Officer. The Tribunal noted that the assessee failed to comply with directions, did not furnish evidence to substantiate claims, and did not justify discrepancies in accounts, leading to the rejection of grounds challenging the additions and disallowances.

Conclusion:
The Tribunal upheld the orders of the authorities below, rejecting the grounds raised by the assessee. Despite opportunities given, the assessee failed to provide evidence to support its claims, leading to the confirmation of additions and disallowances. The general ground was not adjudicated, and the assessee's appeal was ultimately dismissed on 15th July 2022.