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TMI Blog1994 (7) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... as filed and the case was partially discussed. Some queries were raised and the final hearing was fixed for29th May, 1992. On29th May, 1992, the authorised representative was not present, but sent by post further written submissions. The appeal is being decided by taking into consideration these written submissions and discussions with the appellant's representative." It would thus be clear from the above extract that the appellant was given adequate opportunity of being heard by the learned CIT(A). The case was discussed with the authorised representative of the appellant on various dates. On the final date of hearing, the authorised representative did not choose to appear for personal hearing and instead chose to file written submissions to the queries raised by the learned CIT(A). In these circumstances, there does not appear to be any force in the contention of the appellant that the impugned order was wrongly passed ex parte. In fact, more than adequate opportunity was afforded to the appellant and not only the oral submissions made on various dates, but also the written submissions sent on the final date of hearing were duly considered by the learned CIT(A) while deciding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er attended the office. I, therefore, cannot add anything to what has already been mentioned by my predecessor in the assessment order, nor can I offer any comments thereon." 6. On receipt of the report of the Assessing Officer, as above, the learned appellate authority felt unable to decide the appeal unless the various submissions made before him were properly scrutinized by the Assessing Officer. He also observed that the appellant was given proper opportunity and the matter was referred to the Assessing Officer, but the appellant did not co-operate with him, despite the fact that the learned counsel had agreed to produce all the necessary material on which he relied upon before him. In spite of the non-cooperation by the appellant before the Assessing Officer, the learned appellate authority took a very lenient view and set aside the assessment to enable the Assessing Officer to examine the reconciliation statement. The impugned assessment was again finalised ex parte on29th Oct., 1990on failure of the appellant to appear before the Assessing Officer with the result that the stock reconciliation could not be verified in the absence of documentary evidence in support of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement proceedings as undisclosed income from business has already been made by the learned Assessing Officer. According to the appellant, this amounted to subjecting him to the double jeopardy, inasmuch as, besides the addition on account of difference between the closing and opening stock, etc., a further addition of Rs. 2,23,000 offered by the appellant for addition as his undisclosed income from business has also been made. He also contended that he had done his best in cooperating with the authorities below and it was not possible to satisfy any further without the help of the account books which were in the possession of the IT authorities since Feb., 1978. He submitted that the reconciliation statement ought to have been verified by the IT Department from the account books in their possession. He has also submitted that the IT authorities have failed to point out any defect in the books of account despite being in the possession of the said books of account right from Feb., 1978. 9. On the other hand, it has been contended before us by the learned Departmental Representative that the onus was on the appellant and it was open to him to apply for inspection of the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 11. The next contention of the appellant is that the authorities below erred in treating the amount of Rs. 2,23,000 offered for addition in the settlement proceedings as undisclosed income from business, as the income from other sources. 12. Having failed to evoke any response to the various notices issued by the Assessing Officer for finalisation of the assessments de novo as per the orders of the first appellate authority or to complete the other pending assessments in Feb., 1978, the Assessing Officer visited the premises of the appellant at Delhi and impounded the books of account. Thereafter, on16th March, 1978, the appellant moved the Settlement Commission atNew Delhifor settlement of the case for the asst. yrs. 1969-70 and 1971-72 to 1977-78. The petition was allowed to be proceeded with, but for want of non-prosecution the Settlement Commission sent back the case to the Assessing Officer for disposal according to law after utilising all the material and information produced before the Commission, as if no application under s. 245C had been made before the Settlement Commission. Before the Settlement Commission, it was stated by the appellant that, in the interest of jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that if the authorities below were not satisfied that the income offered was not undisclosed income from business, but income from any other source, then they ought to have ignored the offer and proceeded to establish that the income offered for the year under consideration was, in fact an income from any other source. It was submitted that there is nothing on record to prove the stand taken by the authorities below. 15. The Assessing Officer did not accept the contention of the appellant and treated the amount offered for addition as the income of the assessee under s. 69 of the IT Act, i.e., unexplained investments. On appeal, the learned CIT(A) has observed as under: "It is, therefore, crystal clear that the appellant-company has only surrendered accretions to the share capital and unsecured loans of its director-incharge to the tune of Rs. 15,98,000 which took place in asst. yrs. 1975-76 and 1976-77. No attempt has been made to show how these accretions in the directors personal account could be linked with the undisclosed profits of the appellant-company. Further, these accretions emerged in asst. yrs. 1975-76 and 1976-77 only. Apart from the blank statement, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to uphold the version of the authorities below on this point. However, we maintain the addition of Rs. 2.23 lakhs offered by the assessee as undisclosed income from business and not from any other source. 17. The next contention is that the learned CIT(A) erred in not directing the ITO to properly compute the quantum of deduction allowable under s. 80-J of the IT Act, 1961. It was contended that the learned Assessing officer was not justified in restricting the assessee's claim under s. 80J to Rs. 48,088 only when the claim for the entire amount had been found correct and accepted by the Assessing Officer in the original assessment. The assessment order out of which the present appeal has arisen, reveals that the Assessing Officer did not find the said deduction in accordance with r. 19A of the IT Act, 1961. He, therefore, disallowed a sum of Rs. 66,588 as an eligible deduction under s. 80-J. On appeal the action of the Assessing Officer has been upheld. 18. It has been observed by the learned CIT(A) that the appellant made no attempt to substantiate this contention. He observed that it was never clarified to him that what was the actual amount of deduction allowable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r year. The second additional ground relates to the appellant's claim for full deduction under s. 80-J. The third additional ground relates to Triple Shift allowance. 22. After hearing both the sides and having regard to the nature of the claim, we feel that it would be in the interest of justice that the prayer should be allowed. Accordingly, we allow the appeal to proceed on additional grounds. 23. From the perusal of the assessment order, it is seen that the Assessing Officer has allowed full set off of the depreciation claim of Rs. 2,76,983. But out of the Development Rebate of Rs. 3,71,170 only set off of Rs. 2,95,980 could be allowed and the balance amount of Rs. 75,190 was carried forward. The claim on account of Development Rebate under s. 80-J amounting to Rs. 1,25,902 was also carried forward to the next year because of absence of income in the assessment year under consideration to absorb the entire carried forward loss. In the statement of the unabsorbed loss carried forward, the appellant has claimed that an amount of Rs. 40,858 towards depreciation for the asst. yr. 1967-68 has not been allowed to be carried forward by the Assessing officer. He further claimed an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the imported material to factory premises could not be explained on the excuse that the matter was very old, that a finding has already been recorded by the Assessing Officer that the stock tally and quantitative details of raw material was not verifiable and that this being a manufacturing concern, this defect stuck at the very root of the reliability of its accounts. The contention of the appellant that the G.P. rate disclosed for the asst. yr. 1970-71 was accepted by the Tribunal in appeal was also rejected on the ground that the imported raw material was being sold in the open market at a premium which led to much higher earnings. 28. The learned counsel for the appellant has contended before us that the alleged sale of raw material in the open market is mere suspicion, that the books of account were in the custody of the Department and not a single defect was pointed out and unless the books of account are rejected, s. 145(1) cannot be invoked and that the G.P. rate disclosed for the year 1970-71 was upheld by the Tribunal and as such there was no justification in estimating the G.P. rate and making an addition to the gross profit. On the other hand, the learned Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st history of the case" and G.P. rate of 34% for the asst. yrs. 1968-69 and 1969-70. The learned counsel has drawn our attention to the order of the Tribunal dt. 22nd July, 1975 in ITA No. 968 of 1973-74 for the asst. yr. 1970-71 in the applicant's own case, a copy of which is available at page 77 of the Paper Book. In that year also, the Assessing Officer had estimated the G.P. rate at 34% by invoking s. 145(1), for failure to provide quantity stock details. The Tribunal rejected the estimated G.P. rate of 34% and upheld the G.P. rate of 24% disclosed by the assessee. The G.P. rate declared by the assessee for the year under consideration is 27.63, which is higher than the G.P. rate of 24% upheld by the Tribunal. On this ground also, the G.P. rate as estimated by the Assessing Officer cannot be sustained. Accordingly, we accept the G.P. rate of 27.63% declared by the appellant and the addition of Rs. 2,00,750 made is deleted. 31. The third ground relates to the addition of Rs. 3,03,000 on account of unexplained investments from other sources instead of undisclosed income from business. This issue has already been dealt with by us for the asst. yr. 1969-70. We, accordingly, uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to disallowance of Rs. 10,000 out of manufacturing expenses, ground No. 3 relates to disallowance of Rs. 37,650 being interest charged to Profit and Loss Account and ground No. 4 relates to disallowance of Rs. 13,813 being contribution to unrecognised provident fund. 41. As regards the disallowance of Rs. 10,000, the Assessing Officer had observed that manufacturing expenses had increased whereas the sales had decreased. He, therefore, disallowed expenses of Rs. 10,000 being excessive. On appeal, the addition was confirmed. 42. It has been contended by the appellant that except this general statement, no specific reasons have been stated by the Assessing Officer to justify the disallowance. On the contrary. the learned Departmental Representative contended that the assessment being ex parte, the addition is only on estimate basis and as such cannot be regarded excessive. We have considered the submissions of both the parties. In the absence of any specific reasons, the addition of Rs. 10,000 is not justified on the basis of general observations. We, accordingly, delete the addition. 43.As regards the disallowance of Rs. 37,650 being interest charged to P&L Account, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result, the appeal is partly allowed. Asst. yr. 1975-76: 50. For the assessment year under consideration, the following grounds have been taken: "1. That the learned CIT(A) erred in not setting aside the assessment with directions for determining loss returned by the appellant instead of confirming disallowance of entire loss. 2. That the learned CIT(A) erred in holding that the additional income offered by the appellant to the tune of Rs. 3,25,000 was rightly assessed under s. 69 of the IT Act instead of treating the said income under the head income from business." 51. For the assessment year, the assessee had returned an over-all loss of Rs. 13,98,740 consisting of loss of Rs. 14,11,590 from business and an income of Rs. 12,850 from house property. The return was accompanied by an audited Profit and Loss Account and balance-sheet. On failure of the assessee to respond to the notice under s. 143(2), the Assessing Officer proceeded to make an ex parte assessment to the best of his judgment under s. 144 of the IT Act, 1961. The Assessing Officer completed the assessment and disallowed the entire loss. From a perusal of the assessment order, it is seen that the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also. Asst. yr. 1976-77: 55. For the asst. yr. 1976-77, the grounds taken are that the learned CIT(A) had erred in deciding the appeal ex parte; that the authorities below had erred in treating the amount of Rs. 2,20,000 offered for addition before the Settlement Commission as undisclosed income from business as income from other sources, that the authorities below erred in rejecting the appellant's claim for deduction allowable under s. 80-J and that the authorities below erred in not setting off the brought forward losses of earlier years against the income of the assessee. 56. All these grounds are covered in the main order relating to the asst. yr. 1969-70. In accordance with our finding for that year, the appeal is partly allowed. Asst. yr. 1977-78: 57. The grounds taken for the assessment year under consideration are that the CIT(A) has erred in deciding the appeal ex parte, that the amount of Rs. 2,62,850 offered for addition as undisclosed income from business ought not to have been treated as income from other sources and that the losses for the earlier years ought to have been carried forward and set off against the income of the current year. 58. All these grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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