9911796707
TMI Blog2012 (12) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/-. The return was accompanied by Tax Audit Report dated 20.10.2004. The return was originally processed under section 143(1) of the Act. Thereafter the assessee company filed a revised return, within the time permissible under the Act, declaring a loss of Rs.10,57,33,014/-. 4. The case was taken up for scrutiny. Though notices were issued under section 142(1) of the Act from time to time, according to the AO, assessee company failed to comply with the notices. Representative of the company furnished incomplete details. Since the matter was becoming barred by limitation, a final opportunity was given to the assessee on 11.12.2006 to submit the details called for. Since the assessee has not furnished complete details, the AO proceeded to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances over the preceding year the gross loss was restricted to 10% of the turnover which works out to Rs.86,33,435/-. 5. Aggrieved, assessee contended before the CIT(A) that the increase in loss is on account of drastic fall in turnover. It was contended that the AO has admitted the fact that the revenue of the company has dropped almost at 6 times. It is also contended that the total expenditure of any enterprise consists of three components i.e., (a) totally variable expenses, (b) semi variable expenses, and (c) fixed expenses. If the plant was running at optimum level then only variable expenses varies in proportion to production volume but other semi variable and fixed overheads will not fall in the same proportion. In the instant cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lecting higher loss. The learned counsel for the assessee relied upon the decision of the ITAT Delhi Bench in the case of JCIT vs. Video Electronics Ltd. 99 ITD 342 and another decision in the case of Narendra Mafatlal Mehta vs. ITO (1977) 59 TTJ (Bom) 165 in support of his contention that in the event of decline in business due to various factors, which were explained before the AO, it has to be treated as cogent explanation for decline in gross profit ratio and hence no addition can be made merely on account of reduction in gross profit ratio. It may be noticed that the Bombay Bench of the Tribunal observed that without rejecting the book results the AO should not proceed to estimate income. 8. On the other hand, the learned D.R. submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the books are defective or incomplete, in order to estimate reasonable income from turnover. However, in the instant case the assessee has not furnished relevant details and nowhere in the assessment order it is indicated that the assessee has furnished the books of account. On the contrary, the AO categorically mentioned that the assessee has never cooperated with the AO and furnished several incomplete details and did not respond to the notices. In the absence of books the burden cannot be thrust upon the Revenue to prove that the books are defective. The AO cannot be asked to do an impossibility. Under these circumstances, the contention of the assessee that no addition can be made in the event of not giving a specific findi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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