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2022 (8) TMI 1039 - HC - Income TaxEstimation of income - profit was estimated @ 12% on entire turnover - HELD THAT - Tribunal was of the view that the CIT-A has exercised his powers which are coterminous to that of the powers of the AO. However, on going through the order passed by the CIT-A, we find that there is no such exercise done by the CIT-A and all that is observed is that it would be reasonable and in the interest of principles of natural justice to estimate the profit at 12%. In the absence of any reasons given by the CIT-A, we are of the view that the order suffers from perversity which has been perpetuated by the order passed by the Tribunal. We are of the clear view that the order impugned calls for interference. In the result, the appeal filed by the revenue is allowed and the orders passed by the Tribunal as well as the CIT-A are set aside and the assessment order stands revived.
Issues:
1. Whether the order of the Income Tax Appellate Tribunal allowing the assessee's expenditure is justified? 2. Whether the estimation of profit at 12% by the Commissioner of Income Tax (Appeals) and the Tribunal is valid? 3. Whether the claim of transport charges by the assessee was genuine and allowable? Analysis: 1. The High Court considered the appeal filed by the revenue against the order of the Income Tax Appellate Tribunal regarding the assessee's expenditure. The Court noted that the Assessing Officer found the transport charges claimed by the assessee to be non-genuine. The Commissioner of Income Tax (Appeals) revised the addition made by the Assessing Officer, estimating profit at 12%. The Court observed that the CITA and the Tribunal did not delve into the factual matrix presented by the Assessing Officer. The Assessing Officer found discrepancies in the transport charges claimed by the assessee, leading to disallowance of the claim. The Court held that the order of the Tribunal and the CITA lacked reasoning and were therefore set aside, reviving the assessment order dated 28th March, 2013. 2. The Court examined whether the estimation of profit at 12% by the CITA and the Tribunal was valid. The Assessing Officer had raised concerns about the genuineness of the transport charges claimed by the assessee. Despite repeated notices and discussions with the assessee, the Assessing Officer found discrepancies and lack of evidence to support the claim. The Court observed that the CITA and the Tribunal did not provide sufficient reasoning for estimating profit at 12% and failed to dislodge the factual findings of the Assessing Officer. Consequently, the Court held that the order of the Tribunal and the CITA was perverse and called for interference, setting aside their orders. 3. The Court analyzed the genuineness of the claim of transport charges by the assessee. The Assessing Officer, after thorough examination and multiple interactions with the assessee, found discrepancies and lack of supporting evidence for the transport charges claimed. The Court noted that the Assessing Officer's findings were not disproved by the CITA or the Tribunal. As a result, the Court held that the claim of transport charges was not genuine, leading to the disallowance of the expenditure claimed by the assessee. The Court allowed the appeal filed by the revenue, setting aside the orders of the Tribunal and the CITA, and reviving the assessment order dated 28th March, 2013. In conclusion, the High Court ruled in favor of the revenue, highlighting discrepancies in the transport charges claimed by the assessee and the lack of evidence to support the claim. The Court found the orders of the Tribunal and the CITA to be lacking in reasoning and justification, leading to the interference and setting aside of their decisions.
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