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TMI Blog2012 (7) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... r the NP insofar as the AO has not resorted to tinker with the gross profit rate - to proceed simultaneously u/s.143(3)/153A is defective to the extent that the AO cannot roll back from the very facts for computation of income of the assessee for the purpose of his enhancing the income - in favour of assessee. - IT APPEAL NOs. 44 to 61 and 335 (CTK.) OF 2012 - - - Dated:- 29-6-2012 - K.K. GUPTA, K.S.S. PRASAD RAO, JJ. ORDER Per Bench These appeals by the respective assesses as enumerated in the cause-title above being the partners and firms are in appeal before us for the respective AYs mentioned against their names on orders of the learned CIT(A) for the respective AYs which are being taken up together for the sake of convenience and brevity and it has been pointed out that primarily identical orders by the Assessing Officer and the learned CIT(A) have been passed, the issue remaining common to all the assessees being taxation of undisclosed income under the provisions of Section 143(3)/153A. 2. The learned Counsel for the assessee pointed out that in the case of M/s. GRM Enterprises for the Assessment Year 2009-10 return being filed in September, 2009 was take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r books of accounts and documents which hasd not been indicated. The assessee firms are subject to audit u/s.44AB in view of the turnover exceeding Rs. 40 lakhs in each of the Assessment Year as have been noted by him in his order therefore could not lead to a finding that proper books of account have not been maintained. If he was to reject the books of account so maintained, he was to initiate proceedings u/s.145(3) when he chose to estimated 2% without assigning any reason. No specific defects have been found except in the case of Shri Sankar Cashew Industries and instead of choosing to enhance NP he disallowed 20% of the freight charges out of the total claim of Rs. 10,26,200 for the Assessment Year 2008-09. The learned Counsel for the assessee vehemently argued that it was not the case of the assessee to claim expenditure for disallowance u/s.69C when the order has been passed u/s.143(3)/153A. Having accepted the turnover the purchases and freights are incidental to incurring the cost of sales cannot be disallowed on estimation without assigning any reason. He also pointed out that the NP has been computed after paying the working partners salary and interest on the capital co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) therefore held that the estimate is based on the incriminating evidence gathered during the search which incriminating was in the sense that same shows that no proper books of account were maintained by the assessee. The learned Counsel for the assessee humbly prayed that it is not the case of the assessee that the universal maintenance of books of account as per the Accounting Standard whether can be considered improper by the assessing authorities when they have been allowed to reject the books of account by invoking the provisions of Section 145(3). He submitted that the Chartered Accountants have been authorized to conduct the audits, submit their reports on having verified the correctness or completeness of the account of the assessee and if so found the assessee should not be subjected to enhancement on the very facts of turnover and expenditure claimed therein on estimation which finding has to be rebutted by the auditors based on the audit reports. The law prescribes maintenance of books of account on mercantile system of accounting have been accepted therefore could not be held as incriminating by the learned CIT(A) as can be perused in his order who has cho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt were incomplete. She fully supported the orders of the authorities below. 7. We have heard the rival contentions of the parties and perused the material available on record. Considering the facts and circumstances of the case, we are inclined to find force in the contention of the learned Counsel for the assessee to the extent that the assessees should be subjected on the concept of real income either in the return filed by the assessees u/s.143(3) or on the basis of search material under the provisions of Section 153A. We have perused all the appeals and the orders of the Assessing Officer as well the learned CIT(A). There is no denying of the fact that the books of account have been maintained and duly certified having been verified by the auditors who have been authorized by the provisions of the I.T.Act under Section 44AB to submit a report certifying that the books of account were verified which books resulted in computing the returned income by the assessee as per the balance sheet and P L account annexed with the report. In other words, the books not found or incomplete books found were completed and audited by the Chartered Accountants which were verified by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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