9911796707
TMI Blog2017 (10) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... is decrease in the GP rate addition could be made in the absence of any specific finding as to the incorrectness of the accounts. On this aspect, we are in agreement with the Ld. CIT (A) because the AO had to take both the increased and decreased in GP rate in respect of all the units as a whole but leaving the profit making units unrewarded it is not fair to pick up only such units where the GP rate is on a fall. - Decided against revenue Addition made on account of interest earned on year marked funds - CIT-A deleted the addition - Held that:- As per the comments of C&AG the interest earned on these ‘earmarked fund’ shall be transferred and credited to the ‘earmarked fund’ and the corporation has no authority to use or expand or utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) ). 2. Briefly stated relevant facts are that the assessee is a Government Company engaged in various commercial activities which can be categorized into five major groups: Tourism, Construction, Marketing (Trading Distribution), Industry and Financial Assistance. There are 119 units operating in different parts of the State Uttarakhand and outside. For the AY 2007-08 they have filed the return of income on 31.10.2007 declaring a total income of ₹ 1,17,87,340/- and during the scrutiny AO found that the assessee furnished the return only on the basis of tentative profit and loss account. The assessee has been filed the return of income for every assessment year without complying with the tax audit provisions as enumerated u/s 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted as per the provisions of Section 44AB of the Income Tax Act, 1961. It is not possible to rely on these figures for the correct figure of net profit for the corporation as a whole. The accounts were got audited by a Special Auditor u/s 142(2A) of the Act. In the light of the Special Auditor Report it was found that by report dated 29.05.2010 the auditors opined that they are unable to express their opinion about the true and fairness of the profit arrived it by the provisional profit and loss account, but as per tentative receipts and payment accounts provided to them the profit as depicted in profit and loss account has been calculated carefully. Out of 11 divisions or activities of the assessee the AO on comparison with the figur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land and the addition made on the presumptive value of equipments detained by the corporation from erstwhile contractor and lease rent. 3. Challenging the confirmation of the additions assessee is in appeal in ITA No. 4971/2011, whereas challenging the deletions as stated above the Revenue is in appeal before us in ITA No. 4981/Del/2011. 4. At the outset, it could be seen from the record that on some occasions like 10.10.2012, 16.05.2016, 01.09.2016 etc. the adjournments were sought on behalf of the assessee but by and large the assessee does not show any interest in prosecuting the matter and has been continuously absent in spite of several notices being issued. Since it is a matter of 2011, we do not find it just and proper to adjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion could be made in the absence of any specific finding as to the incorrectness of the accounts. On this aspect, we are in agreement with the Ld. CIT (A) because the AO had to take both the increased and decreased in GP rate in respect of all the units as a whole but leaving the profit making units unrewarded it is not fair to pick up only such units where the GP rate is on a fall. No doubt, addition could be made in respect of such units, if the AO finds any specific defect indicating inflation of direct expenses or suppression of receipts. The same method of accountancy had given rise to both rise and fall in the GP rate amongst the divisions of the assessee. In the circumstances, we do not find any justification to interfere with the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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