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TMI Blog2023 (2) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee is against the appeal of the assessee in 2965/Del/2019 which has been filed against the order of the CIT(A) dated 17.01.2019 passed u/s 144 of the Income-tax Act, 1961 (for short, 'the Act') 2. Ground No.3 of the assessee is general in nature which requires no adjudication. The remaining effective grounds No.1 and 2 of the assessee read as follows:- "1. Whether in law and on facts of the case Ld. CIT(A) has erred in allowing relief in respect of addition of Rs.2,09,56,752/- on account of unexplained cash credit u/s 68 of Income Tax Act, 1961. 2. Whether in law and on facts of the case the ld.CIT(A) has erred (i) In allowing relief in respect of net profit of Rs.8,43,809/- estimated at 8% by the AO as against 5% admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any bogus loan leading to addition u/s 68 of the Act on account of unsecured loan from KDSCPL has been found which is an existing assessee filing its return of income. Therefore, the ld.CIT(A) was right in deleting the addition. Therefore, the ground of the Revenue on this issue may kindly be dismissed. 5. On careful consideration of the above rival arguments, we are of the considered view that the AO merely made addition of difference of opening balance of unsecured loan and closing balance of unsecured loan and this issue is revolving around the unsecured loan account of the assessee with KDSCPL entity. It is no a case of the AO that the assessee has taken bogus loan leading to invoking of section 68 of the Act and the loans from same en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any basis which was rightly deleted by the ld.CIT(A) as there was no requirement of rejection of books of account of the assessee and estimating of profit. The ld. AR submitted that however, the disallowance of 40% of the total expenses claimed by the assessee is very excessive as against the 20% made by the AO himself in the preceding and succeeding assessment years, but, the assessee, to buy peace of mind, is not disputing the same. The ld. AR also pointed out that the ld.CIT(A) while dealing with grounds No.2 and 3, rightly held that there was nothing abnormal in the year under consideration to conclude that this year had abnormal claim of expenses except normal business fluctuations. The ld. AR submitted that the ld.CIT(A) has cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luctuations. The AO was right in estimating the profits in the absence of compliance from the appellant, but there was no basis adopted for estimation of income u/s 144. The various courts have held that best judgment assessment must be reasonable, real and on sound basis. There should be proper application of mind to ascertain the probable profits of the appellant. Although at the time of making assessment u/s 144, the AO did not had any reference of assessed profits, but at the time of making assessment u/s 153C, he had the assessed profits of preceding and succeeding years apart from the findings of material found during the search on the group. Probably the AO could not have disturbed the decision made u/s 144, being subjudice at that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout prejudice to it, the AO had not given effect of brought forward business losses while estimating the income of the appellant. The set of losses of current year against any income may be given as per law. The final assessed business loss will not allowed to be carried forward as there is substantial change in management & control of the company." 9. In view of the above findings recorded by the ld.CIT(A) and after considering the rival submissions of both the sides, first of all we are in agreement with the conclusion drawn by the ld.CIT(A) that the AO was right in estimating the profits in absence of compliance from the assessee, but, there was no basis adopted for estimation of income u/s 144 of the Act @ 8% of total receipts/turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the AO at Rs.8,43,809/-. The ld.CIT(A) was also right in allowing losses increased by the assessee during the relevant financial period and did not allow to be carried forward by holding that there is a substantial change in the management and control of the company. The above noted facts have not been controverted by the ld. Sr. DR in any manner. 10. In view of the foregoing and on logical evaluation of the findings recorded by the AO as well as by the ld.CIT(A), we are of the considered opinion that there is no ambiguity, perversity or any other valid reason to interfere with the findings recorded by the ld.CIT(A) on ground No.2. Therefore, we decline to interfere with the same and consequently, ground No.2 of the Revenue being de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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