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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 ..... g books of accounts - AO estimated @ 8% of the total receipts/turnover as 5% admitted by the assessee - HELD THAT:- 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/turnover. Disallowance of loss after rejecting books of accounts which have been restricted being 40% of total expenses - CIT(A) was right in disallowing the expenses @ 40% of the total expenses setting aside the estimation of net profit @ 8% of gross receipts which was calculated by the AO - 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. Revenue appeal dismissed. - ITAs No.2965 & 2966/Del/2019 CO No.133/Del/2022 (ITAs No.2965/Del/2019) - - - Dated:- 21-2-2023 - SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHRI C. M. GARG , JUDICIAL MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in AY 2013-14 which was rightly deleted by the ld.CIT(A). The ld. AR submitted that in para 9.2, the ld.CIT(A) has dealt with the issue in detail and, thereafter, concluded that even during the search no evidences of 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 entity has been treated as genuine in the preceding and succeeding assessment years, then the addition made by the AO u/s 68 of the Act has no legs to stand on the touchstone of provisions of section 68 of the Act. We also note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and expenses collated by the appellant for the years assessed u/s 153C shows that there is not much change in the pattern of revenue and expenses over these years. The deferred revenue expenses from the year under consideration have been claimed in the P L account instead of being deferred, resulting in more loss from the AY under consideration onwards. Further the expenses disallowed in the 153C assessments as percentage of total expenses after GP for the proceeding succeeding years have been perused. These were in the range of 12.77% to 20.46%. The disallowance of expenses for the year under consideration, on the principle of expenses disallowed in proceeding succeeding years work out at Rs 64,93.472/- which is 14.36% of total expenses claimed after GP. The assessment was initially completed u/s 144 due to non compliance by the appellant and in the later assessment u/s 153C for this year, the decision taken in assessment u/s 144 was repeated (copy pasted the order). There is nothing abnormal in the year under consideration to conclude this year had abnormal claim of expenses except normal business fluctuations. The AO was right in estimating the profits in the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed 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/turnover. Thereafter, the ld.CIT(A) noted that the best judgement must be reasonable and on sound basis based on proper application of mind to ascertain the probable profits of the assessee. The ld.CIT(A) held that the estimation made by the AO in the assessment u/s 144 had no basis, but the reasonable basis of estimation of income can be the assessments completed u/s 153C of the Act for the preceding and subsequent assessment years. The ld.CIT(A), after being satisfied with the disallowances made during the earlier and subsequent assessment years, held that the disallowances worked out to be in the range of 12.77% to 20.77% and there was no material on record found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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