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TMI Blog2021 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to have revised the said order in exercise of the powers that were vested with him u/s 263 of the Act. Our aforesaid view that where on the date of framing of assessment two views qua an issue were possible, and the A.O had taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue, unless the view taken by the A.O is unsustainable in law, is supported by the judgment in the case of CIT Vs. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT ] - As such, not finding favour with the order passed by the Pr. CIT u/s 263 of the Act, dated 23.03.2017, we herein set-aside the same and restore the order passed by the A.O u/s 143(3) r.w.s 147, dated 25.03.2015. - ITA Nos.2559 to 2562/MUM/2019 - - - Dated:- 20-7-2021 - Shri Rajesh Kumar (Accountant Member) And Shri Ravish Sood (Judicial Member) For the Assessee : Shri Mani Jain, A.R For the Revenue : Shri Kipgen,, D.R ORDER PER RAVISH SOOD, J.M: The captioned appeals filed by the assessee are directed against the respective orders passed by the Principal Commissioner of Income-tax-26 (for short Pr. CIT ) under Sec. 263 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income filed by the assessee was processed as such u/s 143(1) of the Act. Observing, that against the total receipt of ₹ 1,61,81,566/- on which TDS of ₹ 3,21,419/- was deducted as per Form AS 26 the assessee had declared only an amount of ₹ 57,72,038/- and claimed credit for the entire amount of TDS of ₹ 3,21,419/-, the A.O reopened his case u/s 147 of the Act. In the course of the assessment proceedings the assessee filed a revised return of income declaring a total income of ₹ 11,18,400/-. On a perusal of the profit and loss account that was filed by the assessee alongwith his revised return of income, it was observed by the A.O that he had though credited the entire receipts of ₹ 1,61,81,566/-, but thereafter claiming expenses under the various heads had reflected a minimal net profit of ₹ 11,99,356/-. As the facts unfolded in the course of the assessment proceedings, it was observed by the A.O that the assessee had neither maintained any books of accounts nor as a consequence thereto complied with the provisions of Sec. 44AB of the Act. As the assessee had neither maintained his books of accounts nor had any supporting docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R ) for the assessee that the present appeal involved a delay of 504 days. Elaborating on the reasons leading to the aforesaid delay, it was submitted by the ld. A.R that as the order passed by the Pr. CIT u/s 263, dated 23.03.2017 was during his absence served upon his wife Mrs. Sanjeevani V. Mhatre, who at the relevant point of time was not keeping good health and on account of certain multiple medical issues had also remained bed ridden, the impugned order, thus, had inadvertently remained omitted on her part to be delivered to the assessee. It was further submitted by the ld. A.R that it was only when the assessee s Chartered accountant while compiling the submissions with respect to the appeal that was preferred against the order passed by the A.O u/s 143(3) r.w.s 147 had inquired about the status of the order that was passed u/s 263, it was only then that the assessee after making necessary enquiries had gathered that the said impugned order was served on his wife who inadvertently had omitted to deliver the same to him. It was stated by the ld. A.R that the assessee after locating the impugned order had thereafter without any further loss of time delivered the same to his c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions in context of the issue pertaining to the delay involved in filing of the present appeal before us. In our considered view, the aforesaid facts deposed by the assessee in his duly sworn affidavit inspires substantial confidence as regards the bonafide reasons which had led to the delay in filing of the present appeal. The assessee would not have benefited by adopting any dilatory strategy in filing of the present appeal before us. We find that as held by the Hon ble Supreme Court in the case of Ramnath Sao Vs. Gobardhan Sao (AIR 2002 Supreme Court 1201), in a case where the explanation of the assessee in respect of the delay in filing of an appeal does not smack of malafide or a dilatory strategy on his part, then, the said explanation cannot be merely turned down for the reason that delay is involved in filing of the appeal. In the aforesaid judgment, the Hon ble Apex Court while condoning a delay of 130 days that was involved in the said appeal had drawn support from its earlier order passed in the case of N. Balkrishnan Vs. M. Krishnamurthi (1998) 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit rates of 8.71% to the assessee s gross receipts of ₹ 1,61,81,566/- and estimated his business income at ₹ 14,09,414/-. It was, thus, submitted by the ld. A.R that the A.O on the aforesaid basis had estimated the business income of the assessee at ₹ 14,09,414/-. It was submitted by the ld. A.R, that now when the A.O had rejected the book results of the assessee and had by applying the average net profit rate of 8.71% (supra) estimated his business income, therefore, there remained no occasion for him to have separately disallowed certain amounts that formed part of the profit and loss account that was already rejected by him. In sum and substance, it was the claim of the assessee that now when the A.O had estimated the business income of the assessee for the year under consideration by applying the average of the net profit rates for the A.Y.2008-09 to A.Y. 2011-12 to the gross receipts of the assessee, therefore, after computing the said estimated business income he could not have separately worked out disallowances in context of expenses which were debited in the profit and loss account. In support of his aforesaid contention the ld. A.R had relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order passed by the A.O u/s 143(3) r.w.s 147, dated 25.03.2015 was erroneous in so far it was prejudicial to the interest of the revenue u/s 263 of the Act. 9. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. It is a matter of fact borne from the record that the A.O vide his order passed u/s 143(3) r.w.s 147, dated 25.03.2015, after taking cognizance of the fact that the assessee had neither maintained the books of accounts nor could substantiate his claim of expenses on the basis of supporting documentary evidence, had thus, rejected the books results, and after applying the average of the net profit rate of 8.71% (supra) to his gross receipts of ₹ 1,61,81,566/- estimated the business income at ₹ 14,09,414/-. As submitted by the ld. A.R, and rightly so, once the business income of the assessee had been estimated in the manner stated hereinabove, then, the A.O could not have been expected to have supplemented the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stage, we may herein observe, that a disallowance contemplated in Sec. 40(a)(ia) can be made only where the assessee had claimed deduction of an amount under Sec. 30 to Sec. 38 of the Act, and not otherwise. Our aforesaid view can safely be gathered from a perusal of Sec. 40 of the Act, which reads as under : 40. Not withstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession , - ....................................................................................................... Now, in the present case, the A.O not being satisfied with the correctness and completeness of the accounts of the asseseee had made the assessment in the manner provided in Sec. 144, and thus, after rejecting the book results had applied the average of the net profit rate of 8.17% (supra) to the gross receipts and assessed his income at an estimated figure. We, thus, are of the considered view, that as the A.O while assessing the income on an estimate basis had at no stage considered the assessee s claim for deduction of the impugned expenses on which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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