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TMI Blog2019 (2) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... We note that the DR could not controvert these facts pointed out by the AR challenging the action of Assessing Officer in respect of bringing M/s VRL Logistics as comparable and not giving opportunity to assessee to bring its own comparable to justify the net profit/gross profit of the assessee company.The aforesaid action of the AO cannot be countenanced by us. If the AO found fault with the books which assessee has regularly maintained, and which are admittedly audited, and in case if the AO was of the opinion that the assessee has not regularly followed the method of accounting as mentioned u/s 145(1) of the Act or that the assessee has not computed the income in accordance with accounting standard notified u/s 145(2) and if the AO was not satisfied with the correctness of the accounts of the assessee, then AO was at liberty to make an assessment in the manner provided u/s 144 which is the best judgement assessment. However, before doing so, he has to grant an opportunity of being heard as prescribed u/s 144 of the Act. Without doing so, the AO ought not to have gone to estimate the net profit of the assessee and moreover before bringing in any comparable like that of M/s VR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT DR as to whether the assessment years 2009-10 to 2013-14 was pending before the AO on the date of search which he answered as not pending before the AO on the date of search. On our next query as to whether the Assessing Officer took the aid of any incriminating materials to make any additions/disallowances, the ld. CIT-DR fairly admits that there were no incriminating materials the Assessing Officer referred in his order to make the additions/disallowances. In this background, we after having carefully examined each assessment orders from Assessment Year 2009-10 to 2013-14 and taking note that these assessment years were not pending before the Assessing Officer on the date of search, so we concur with Ld CIT(A) that these assessment years were unabated assessments and therefore the ld. CIT(A) was correct to hold that additions/disallowances cannot be made without the aid of any incriminating materials unearthed during search qua these assessment years. Therefore, in furtherance to section 153A proceedings, the AO has to reiterate the returned income / income intimated under 143(1) / scrutiny assessment made under 143(3) / 144of the Act / reassessment done under 147. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be reiterated and the abated assessment or reassessment can be made. The word assess in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word reassess to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Hon ble Kolkata High Court in the case of Veerprabhu Marketing Ltd. has held as under: The Hon'ble Jurisdictional Calcutta High Court in ITA No. 661 of 2008 Commissioner of Income Tax vs.Veerprabhu Marketing Ltd. has also held as under: We ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n disclosed for A.Y. 2015-16. However, the AO noted that when the return of the assessee was filed post search, the profit was only to the tune of ₹ 13,03,65,534/-. The AO took note of the fact that the total income as per return filed u/s 153A or revised return was lower for all the years except that of Assessment Year 2011-12. Now, Assessment Year 2011-12 is not relevant for adjudicating these appeals. According to the AO, the disclosure made by the assessee has been negated by inserting additional heads of expenses featuring for the first time in the form of bad debts damages etc. These new claims of assessee were all questioned by the AO during 153A proceedings and even though the assessee gave explanation to the queries but these replies of assessee were not acceptable for the Assessing Officer. So he compared the assessee s income to that of a company called M/s VRL Logistic which according to the AO caters to the same segment of activities as that of the assessee and thereafter the Assessing Officer reproduced the performance of the M/s VRL Logistic at page 16 of his order and then estimated the rate of profit at 6.54 percentage and applied the same on the assessee s o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer in respect of bringing M/s VRL Logistics as comparable and not giving opportunity to assessee to bring its own comparable to justify the net profit/gross profit of the assessee company. In the light of the aforesaid facts as discussed, the aforesaid action of the AO cannot be countenanced by us. If the AO found fault with the books which assessee has regularly maintained, and which are admittedly audited, and in case if the AO was of the opinion that the assessee has not regularly followed the method of accounting as mentioned u/s 145(1) of the Act or that the assessee has not computed the income in accordance with accounting standard notified u/s 145(2) and if the AO was not satisfied with the correctness of the accounts of the assessee, then AO was at liberty to make an assessment in the manner provided u/s 144 which is the best judgement assessment. However, before doing so, he has to grant an opportunity of being heard as prescribed u/s 144 of the Act. Without doing so, the AO ought not to have gone to estimate the net profit of the assessee and moreover before bringing in any comparable like that of M/s VRL Logistics, the assessee must have been given notice calling upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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