2017 (1) TMI 265 - HC - Income Tax

Verification of books of accounts - Auditor s Report reliance - all the books of account and supporting evidences were destroyed in fire broke out at the assessee-company s premises - Held that - Assuming that the Auditor s report could not have been relied upon in that case also the next question would be with respect to estimation of profit. Considering the order passed by Delhi High Court and the Tribunal for AY 2006-2006 the estimation of profit has been considered. Therefore it cannot be said that any substantial question of law arise in the present Tax Appeal. It cannot be as well said that the learned Tribunal as well as CIT A committed any error of law which calls for interference by this Court.

Summary

Issues:
1. Appeal against the judgment of the Income Tax Appellate Tribunal regarding the destruction of books of account in a fire.
2. Reliability of the Auditor's Report post the fire incident for the assessment year 2006-07.

Analysis:
1. The appellant challenged the judgment of the Income Tax Appellate Tribunal (ITA) regarding the destruction of books of account in a fire incident. The appellant contended that due to the fire on 18th May 2006, all books of account and relevant material were destroyed, making it impossible for the auditors to prepare an Audit Report until 26th October 2006. The appellant questioned the reliance on the Auditor's Report under such circumstances.

2. The High Court noted that even if the Auditor's report could not be relied upon, the next issue would be the estimation of profit. Referring to the order passed by the Delhi High Court and the Tribunal for the assessment year 2006-07, the estimation of profit was considered. The Court held that no substantial question of law arose in the present Tax Appeal. It was also observed that neither the Tribunal nor the Commissioner of Income Tax (Appeals) committed any legal error warranting intervention by the Court.

In conclusion, the High Court dismissed the Tax Appeal as it failed to establish any legal grounds for interference. The Court found no merit in the appellant's contentions regarding the destruction of books of account in a fire and the reliability of the Auditor's Report post the incident for the assessment year 2006-07.