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TMI Blog2015 (11) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... m - Held that:- As observed by the Ld. CIT(A), it is clearly evident that the Assessing Officer had not examined the assessee’s claim for carry forward and set off of earlier year’s business losses and unabsorbed depreciation. Revenue’s contention that the Ld. CIT(A) had directed the Assessing Officer to allow the assessee’s claim in this regard is factually incorrect. The Ld. CIT(A), as observed that since the Assessing Officer had rejected the assessee’s books of account summarily , he would not have examined the assessee’s claim for carry forward and set off of business losses and unabsorbed losses of earlier years and, therefore, directed the Assessing Officer to examine the assessee’s claim in accordance with law and also to dispose off the pending rectification applications, if any, in this regard. The Ld. AR of the assessee drew the attention of the Bench to the order giving effect to the impugned order of the Ld. CIT(A) wherein the Assessing Officer has examined and adjudicated on the assessee’s claim for carry forward and set off of unabsorbed losses and depreciation. - Decided against revenue - ITA No. 5616/MUM/2013 - - - Dated:- 20-11-2015 - Shri Jason P. Boaz Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of GP ration of the assessee with other companies determined the total income at ₹ 91,00,00,000/- against the total loss of ₹ 11,07,08,83,371/- 2. 'On the facts and circumstances of the case, the Ld.CIT(A) failed to appreciate the fact mentioned by the AO in his assessment order and directed the AO to allow the carry forward and set off of unabsorbed business loss and depreciation of earlier years apply the relevant provisions of the Act for the purpose determining the correct figure of loss. 3. The Appellant craves to leave to add, to amend and/or to alter any of the grounds of appeal, if need be. 4. The appellant, therefore, prays that on the grounds stated above, the order of the CIT(A)-39, Mumbai may be set aside and that of the Assessing Officer be restored. 4. The grounds raised at Sl.Nos. 3 4 are general in nature and, therefore, no adjudication is called for thereon. 5. Ground No.1 Estimation of Income at ₹ 91.00 crores 5.1 In this ground Revenue contends that the Ld. CIT(A) erred in disallowing the addition on account of estimation of income of ₹ 91.00 crores made by the Assessing Officer on the basis of ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if material defects or anomalies were found in the assessee s books, it would be a basis for estimation of income. The Ld. CIT(A) observed that, however, in the case on hand, the estimation of the assessee s income by the Assessing Officer based on advance tax/payments was not called for, when the Assessing Officer has failed to point out defects in the assessee s audited books of accounts. The Ld. CIT(A) further observed that in the case on hand, no suppression of turnover has been established and that low G.P by itself is not a valid reason for rejecting the book results and estimation of income. At paras 9.3 and 9.4 of the impugned order, the Ld. CIT(A) has held as under:- 9.3 The A.O. thus estimated the total income for the impugned year solely on the basis of the advance tax paid. What is required to be examined is whether the estimate based on the advance tax paid can be equated with the total taxable income of a previous year. A low G.P. by itself is certainly not a valid reason for rejecting the book results and estimation of income. Certainly if there are material defects, the income can be estimated but it has to be on a sound basis. Certainly, if there are anomal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pre-assessment collection of taxes which is to be later adjusted towards the income tax levied on the total income as finally determined. An estimate by its very nature has an element of guess work and hence prone to be inaccurate. For the said reasons, it has to be held that the payment of taxes cannot be a basis for estimation of income. Therefore, I am unable to sustain the action of the A.O. in assessing the total income at ₹ 91 Crs. also ignoring the accumulated losses as determined in the earlier years as per returns of income filed. 5.3.2 Before us, Revenue has failed to contravene the finding of the Ld. CIT(A) in the impugned order that the Assessing Officer s estimation of the assessee s income, primarily on the basis of advance tax paid and rejection of books of account without finding any discrepancy or suppression of turnover, etc., is not sustainable. We concur with the view of the Ld. CIT(A) that it is difficult to accept the Revenue s plea that payment of advance tax is tantamount to disclosure of income by the assessee or that it can be the sole basis for estimation of the assessee s income. In this factual matrix of the case, we uphold the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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