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TMI Blog2019 (10) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and estimating the income directly. Even if estimation was to be adopted, then comparative study would have to have been done. Obviously, the assessee s accounts for the earlier and subsequent years could be based as comparative study. This being so, as the assessment has been done for estimating the income and CIT(A) has reduced the said estimate. The estimation itself is impermissible under law, especially in view of the fact that incriminating materials have been found in the course of search. Consequently, the assessment order and the impugned order of CIT(A) in respect of present appeals are set- aside and the issues in the appeals are restored to the file of AO for re-adjudication and for determination of the correct income of assessee on the basis of the materials available and found the course of search. The Assessing Officer shall not resort to short cut method of applying provisions of section 44AD of the Act, when the turnover of assessee exceeds the prescribed limit u/s.44AD - All the appeals of assessee are partly allowed for statistical purposes. - ITA No.1021 to 1027/Chny/2019 - - - Dated:- 24-9-2019 - Shri George Mathan, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made on basis of assumption to invoke Sec.153A, as the AO states Assessee has not maintained books of accounts but invokes Sec.145(3) to reject the books which according to AO does not exist. 3. The revised demand of the AO sought to be recovered pursuant to CIT(A)'s order vide letter dated 27.02.2019 is incorrect and inconsistent with the order of CIT(A). 4. In order dated 09.10.2019 passed by CIT(A) in respect of penalty proceedings imposed by AO under Section 271A rws 274 of the Act, the following were observed while allowing the appeals of the Appellant by dropping penalty proceedings for AYs 2009-10 to 2015-16: (a) Assessee was maintaining books of accounts and also kept vouchers for expenditures. (b) No specific books of accounts have been prescribed for business of a civil contractor and thus rigor of penalty u/s 271A is not applicable. (c) Reference was made to sub section (2) of Sec. 44AA of the Act, to indicate that the appellant had maintained books of accounts and other documents that could have enabled AO to compute Assessee's total income in accordance with the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). It was submitted that ld.CIT(A) had in his impugned order under appeal reduced the estimation of income to 7% from 9% as estimated by the Assessing Officer. It was submitted that no estimation was liable to be made. It was submitted that in respect of penalty levied u/s.271A of the Act, ld.CIT(A) had allowed the assessee s claim by holding that: The assessee is a civil contractor and is not involved in a specified business for which specific books of account and documents are statutorily required to be maintained in terms of Section 44AA read with Rule 6F(1) of the income Tax Rules, 1962. It is a fact that books of account as contemplated in Sec.44AA are not maintained by the assessee. This being the case, even though specified books of account as per the Act are not maintained, assessee was maintaining bank accounts, keeping vouchers for expenditure. The Provisions which the Assessing Officer could rely upon is sub-section(2) of section 44AA of the Act which enjoins upon the Appellant to keep and maintain such books of account and other documents as may enable the Assessing Officer to compute Appellant s total income in accordance with the provisions of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a finding that the assessee being a civil contractor, is not involved in a specified business for which specific books of account and documents are statutorily required to be maintained in terms of section 44AA read with Rule 6F(1) of Income Tax Rules, 1962. A perusal of pra 5.4 of ld.CIT(A) s order cancelling the penalty levied u/s.271A of the Act shows that: The Appellant s explanation that the profits could be worked out by preparing income and expenditure statement , is plausible. In fact, the Assessing Officer could disallow such expenditures ig he comes to a conclusion that they are not substantiated or are not incurred wholly and exclusively for the purpose of the Appellant s business. In fact, I have in the quantum appeals vide order in ITA Nos.279 to 285/18-19 dated 09.01.2019. I have given partial relief to the Appellant by holding that 7% of the turnover as income from contract business would meet the ends of justice. Ld.CIT(A) has categorically given a finding that the Assessing Officer could disallow such expenditure, if he comes to a conclusion that they are not substantiated or are not incurred wholly and exclusively for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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