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TMI Blog2018 (8) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... "the Act") for rectification of the order dated 16.11.2006 passed by the Assessing Officer (AO) has been rejected. 2. The brief facts relating to the appeal is this that the assessee has filed its return of income for the AY 2004-05 on 01.11.2004 showing loss of Rs.(-)56,80,981/-. Upon scrutiny, notices were sent to the assessee including show-cause notice dated 05.10.2006. Since nothing was forthcoming from the assessee ex-parte order was passed by the Assessing Officer (AO) to the effect as follows:- "5. Indirect Expenses:- The company has debited Indirect Expenses of Rs. 95,30,347/- to the profit and loss account as detailed under schedule L to P&L, account, which includes the following: 1 S.No. Expenses on account of Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y asked to explain the Bad debts of Rs. 13,51,585 vide Q.No.11(vii) this office letter dated 10.07.2006, dated 31.07.2006 and thereafter vide Q.No.5(vii) of Final show cause dated 05.10.2006. There was no response from the assessee. Therefore, the claim remains unexplained, unproved and unsupported by any evidences. 7. Since the above two additions have the effect of concealing the particulars of income and the addition there off results into reducing the loss declared in the return of income. It is held that tax that would have been chargeable on the income in respect of which particular have been concealed or inaccurate particulars have been furnished had such income been total income. Therefore penalty proceedings u/s.271(1)(c) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, complete verification of the expenses debited under the various head of the indirect expenses are not possible, hence, the A.O. was justified in making the disallowance at 40% of these expenses. This has been refuted by the appellant in his rejoinder to the remand report. These issues are taken up as follows: (i) So far as provision made for expenses are concerned, the appellant in his submission had itself admitted that the amounts of Rs. 5,61,9111/- pertain to the prior financial year as it was a balance as on 01.04.2003. Hence, this amounts being prior period expenses and there being no explanation on behalf of the appellant as to how these amounts are allowable in the current assessment year, the same cannot be allowed as deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision for expenses. It was explained that out of the said expenditure Rs. 5,61,911/- was the opening balance as on 1-4-2003. The said item viz. 11,32,997/- was a Balance Sheet item and never entered the Profit & Loss Account of the year under consideration. It was explained that the expenditure to the extent of Rs. 5,71,096/- only was debited to the Profit & Loss Account under this head during the year. b) In view of the above, it is submitted that while deciding the appellant the expenses amounting to Rs. 5,61,911/- have wrongly been held as Prior Period Expenses. All the relevant documents viz. (i) Copy of Assessment Order dated 6.11.2006; and (ii) Copy of submissions filed before the Hon'ble CIT(A) are enclosed as EXHIBIT- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gone through the record carefully. It is pertinent to note that that section 144 would suggest that in order to estimate income, learned Assessing Officer has to exercise his discretion which should be in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment assessment, the Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee about his business, the previous history of the assessee or the similarly situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation was preferred and ultimately dismissed by the order dated 12.05.2016 merged with the order passed by the Co-ordinate Bench on 10.12.2015 and attained finality. In view of that matter, rectification application of the quantum order dated 19.03.2012 itself has lost its force since the very basis of such application i.e. quantum order dated 19.03.2012 has already been tested and decided in appeal. Consequently, the application before us questioning the validity of rejection of the said rectification application rendered infructuous. Accordingly, the appeal filed by the assessee is dismissed as infructuous.
7. In the result, appeal of the Assessee is dismissed as infructuous.
This Order pronounced in Open Court on 07 / 08 /2018. X X X X Extracts X X X X X X X X Extracts X X X X
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