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TMI Blog2023 (6) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... undisputed facts available before him and rather contrary to the fact so far as the brought forward loss of Rs. 2.55 crores which was subsequently accepted by the AO in the remand proceedings. Assessee stated that it has produced books of account along with vouchers and when the AO has not considered the books of account and vouchers but rejected the books of account of the assessee the same were produced before the ld. CIT(A) and therefore, there is no violation of Rule 46A of the Income Tax Rules. CIT(A) has confirmed these facts while passing impugned order that the record was brought before the AO but it was not considered. Thus, AO misconducted himself while passing the assessment order and therefore, the record which was already filed before the AO was rightly considering by the CIT(A) while passing the impugned order. No error or illegality in the impugned order of the Ld. CIT(A) same is upheld. Decided in favour of assessee. - ITA No. 89/Ind/2022 - - - Dated:- 8-6-2023 - Shri Vijay Pal Rao, Judicial Member And Shri B.M. Biyani, Accountant Member For the Revenue : Shri P.K. Mishra, CIT-DR For the Respondent : Shri S.S. Solanki, AR ORDER PER V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or tribunal can condone delay) and termination of proceedings. Accordingly, in view of the judgment of Hon ble Supreme Court in suomoto cognizance for extension of the limitation, the appeal of the revenue is treated as filed within the period of limitation. 3. The Revenue has raised following ground of appeal: 1. The Ld. CIT(A) was not justified in deleting the addition of Rs. 5,20,37,486/- out of the total addition made of Rs. 5,38,80,806/- admitting the additional documents, violating the Rule 46 of the I.T Rules, 1962 regarding admission of additional evidences. 2.The Ld. CIT(A) was not justified in not considering the letter of AO to extended the time limit for filing the final remand report as she (AO) was busy in completing the time barring assessments. However, the Ld. CIT(A) proceeded and passed appellate order without obtaining the said remand report for the AO. 3.The Ld. CIT(A) was not justified in ignoring the remand report dated 11.11.2016 in which specifically mentioned that the assessee was entitled for set off of earlier loss amounting to Rs. 2,55,25,774/- however the Ld. CIT(A) allowed the loss of Rs. 13,43,58,600/- without any specific findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de and the matter may be remanded to the record of the AO for fresh examination and adjudication. He has relied upon the order of the Ld. AO. 7. On the other hand, Ld. AR has submitted that during the course of assessment proceedings the assessee through its representative Shri Mahendra Kumar Jain, CA attended the office of the Assessing Officer and submitted its submissions/reply to the notice u/s 142(1) of the Act dated 19.02.2015. The AO did not take submissions filed by the assessee on record on the ground that it is not filed with the power of attorney in favour of the representative. Ld. AR has further submitted that on the very next day when the representative of the assessee again tried to submit power of attorney, he was asked to come on next working day and on the next working day he again reached to the office of the AO to submit requisite power of attorney, the AO did not allow the same on the ground that there is no date fixed for hearing of the assessee s case. Therefore, the assessee was denied to submit power of attorney and relevant papers, information and explanation to the notice u/s 143(1) of the Act. The AO has framed assessment u/s 144 ignoring the loss dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 45 lakh is related to sale of property of the assessee and relevant details were produced. The AO verified all these documents and no adverse comments were passed by her. 8. As regards the certain queries raised by the AO during the remand proceedings the assessee filed the reply dated 16.10.2016 and produced requisite details and documents including depreciation chart. Ld. AR has further submitted that the AO has calculated a sum of Rs. 13,92,820/- as disallowable u/s 40A(3) whereas the assessee itself has made a suo-moto disallowance of Rs. 47,73,187/- in the computation of income. Therefore, this figure of Rs. 13,92,820/- is included in the suo moto disallowance made by the assessee of Rs. 47,73,187/- . Further an amount of Rs. 1,50,500/- paid to transporters has already been disallowed. 9. The Ld. AR has submitted that in the remand report dated 11.11.2016 the AO has question only three items. The AO verified the books of account and bills and vouchers and after verification raised specific queries regarding disallowance u/s 40A(3) of Rs. 13,92,820/- which is already part of the suo-moto disallowance of Rs. 47,73,187/-, disallowance u/s 40(a)(ia) of Rs. 1,50,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f restructuring. Accordingly further notice u/s 143(2) and 142(1) were issued on 19.01.2015. Thus, it is clear that after the case was selected for scrutiny in the year 2013 the proceedings were resumed in the month of January 2015. Since the case was time barring in the end of March 2015 therefore, the AO was in hurry to complete the assessment and issued notice u/s 143(2) and 142(1) on 19.02.2015 and summons u/s 131 on 03.02.2015 fixing date of hearing on 03.03.2015. As there was no compliance on behalf of the assessee therefore, a summon was also issued to the auditor of the assessee for production of audit report of the assessee. In response to that the auditor of the assessee attended the proceedings and filed audit report. Further the AO recorded that when there is no response of the assessee to the notice u/s 143(2) and 142(1) he has no option but to invoke the provision of section 144 of the Act. Ld. AO further recorded that on perusal of the Income Tax Return and audit report furnished by the auditor of the assessee it was noted that gross receipt of the assessee for year under consideration was Rs. 1,81,51,290/- whereas the assessee has claimed loss of Rs. 13,43,58,600/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the fact that assessment order was passed u/s 144 and the AO resumed the assessment proceeding in the month of January 2015 whereas the limitation was to expire in the month of March 2015. The Ld. CIT(A) called for remand report from the AO. The AO submitted the remand report dated 11.11.2016 and raised various issues which are reproduced by the Ld. CIT(A) in para 4 as under: 4.The AO vide his remand report di 11.11.2016 upon the following:- i) The auditor of the assessee company CA Jitendra Mishra submitted Statutory Audit report but no IAR was either done or produced by him. ii) That set off of losses of earlier years carried forward losses was not allowed as the case record of earlier year were not transferred in her office by previous AO. Now copy of assessment order for A.Y. 2011-12 is submitted and as per order u/s 143(3) for the A.Y.2011- 12. the assessee is entitled for set off of losses of earlier years amounting to Rs. 2,55,25,774/- iii) With regard to statutory allowance, no such claim of depreciation has been filed. iv) This office has called for Books of account and it was observed that ledger was not supported with complete bills. Hence reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and was agair explained My predecessor while directing the AO to submit remand report had very strongly condemned the high handed attitude of the W Relevant paras are reproduced below:- During the course of hearing. I have gone through the assessment order, written submissions and remand reports submitted be the Assessing Officer. Plain reading of part 1 and 2 of the assessmen order revels that the appellant was not afforded sufficient opportunity to present the case during the course of assessment proceedings: The first notice was issued in this on 06 08 2013 and was served and appellant on 13/08 2013. The second notice issued on 1999), 2015 was returned back as unserved. Thereafter, one more notice was stated to having issued fixing the case on 19/02/2015 which does not specific date of issue of notice. A summon dated 23.02.2015 was issued fixing the case for 03/03/2015. However, whether the summon was served clear from the above discussion that between 06-18 2013 to 19/02/2015. no assessment proceedings were carried out by the Assessing Officer. It was only when the assessment was getting barred by limitation, a notice dated 19/02/2015 was issued followed by summon as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout pointing out any serious or major defects in the books of account which were attempted to be filed during the course of assessment proceeding and were finally produced before the AO during the remand proceedings. The AO though verified the books of account of the assessee and in the first remand report has pointed out certain issues needs to be explained by the assessee. Therefore, once the AO has specifically raised certain queries regarding certain issues which were subsequently explained by the assessee and second remand report was called for by the Ld. CIT(A) then the rejection of books of account was no more justified. The assessee has relied upon various judgment of Hon ble High Courts including jurisdictional High court on the point that section 144 would be attracted only to case where either the accounts are not correct or incomplete or the method of accounting employed is such that in the opinion of the AO the income of the assessee would not be properly deduced from such accounts maintained by the assessee. Therefore, it is only a case where accounts were not correct or incomplete or method of accounting employed by the assessee is not such as to enable the AO to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumentary evidence. 13.1 The appellant has produced books of account along with documents evidences w.r to the additions made twice before AO and also before my predecessor. The same were thoroughly checked by the NO and no adverse comment on disallowances were made. Though the AO rejected the books again in remand report but in and are general manner. No specific major defect was pointed out by the AO. 13 de remand reports submitted by the AO, the AO has not adversely commented on any of the additions made u/s 144. After detailed and books of account and documentary evidence produced, she proposed the following as disallowable (i) Disallowable us 40A(3) 13,92,820 (ii) Disallowance u/s 40(a)(ia) 1,50,500 (iii) Rental Income not shown 3,00,000 18.43.320/- He AR of the appellant submitted that disallowance of Rs. . 13,92,820/-and Rs. 1,50,500/- has already been made and rental income of Rs 3.00.000- has been offered to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- Sec. 145 would be attracted only to a case where either the accounts are r correct or complete to the satisfaction of AO or the method employed is such that in the opinion of the AC the income of the assesse could not be properly deduced from such accounts maintained the assessee.Thus, it is only in a case where accounts were not correct or complete or where accounts are correct and complete but method employed coming is not such as to enable the AO to deduce the income of the assessee properly, the assessment of the income of the assessee could be made in such manner as the AO may determine. The Tribunal although held that the AO had not found any sales outside the books of the assessee, had not given any clear finding as to whether the assessee had correctly and completely maintained the accounts or that from the accounts maintained by the assessee, his income could not be correctly deduced and yet has directed the AO not to compute the income of the assessee in accordance with his books of account but to apply GP rate of 20 per cent for gold ornaments and 32 per cent for silver ornaments. The Tribunal should have recorded a clear finding as to whether or not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f account properly, rejected the same and made certain additions on account of suppression of receipts. On appeal Commissioner (Appeals) as well as the Hon'ble Tribunal deleted the said addition. On revenue's appeal. it was noted that assessee my produced recipes and the AD had adopted method of estimation without there having any rational basis to support guess work. Nevertheless in the case, where the AO without recording any finding that the books of account maintained by the appellant were incorrect, proceeded to reject the books of account on the basis of his sweet will without having any documentary evidences on record. In these circumstances, the rejection his no legs to stand. (i) Hon'ble Apex Court in the case of Dhakeshwari Cotton Mills vs. CVT noted in 26 FIR 775 (SC) hold that AO cannot make any addition on the account of his guess work without having any material evidence on record. The relevant extracts of the said judgement if reproduced as under:- that making the assessment under sub section 3 of section 23 of the Income Tax Act. 1992 Corresponding to the section 143(3) of the Income Tax Act, 1961 the Income Tax Officer is not entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint out any illegality or perverse in the said finding of fact. Thus, we find no infirmity in the order of the Tribunal. (xii) In the case of CIT vs. Vikram Plastics reported in 239 ITR 161 Hon'ble Gujarat High Court held that it was found there was no discrepancy or defects in books of account maintained by assessee and further the books of account maintained by assessee were not found to be incorrect or incomplete and that no material was brought on record by the revenue to prove that purchases and expenses had been inflated or sales had neon suppressed. In this context the Hon'ble High Court held that, In our opinion, in view of the finding reached by the Tribunal that there were no discrepancies or defects pointed out in the books of account and further at they were regularly maintained and also on the finding that there was no material brought on record to establish that purchases or expenses were inflated or sales suppressed and also in view of the finding that this was made as that there was no method of regular accounting employed, the Tribunal was fully justified in coming to the conclusion that the provisions of section 145(2) could not be invoked, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having en incorrectly recorded, cannot form the basis for rejection of books of account. 14.3 The existence of books of account and relevant documents have not been disputed by the AO. When complete books of accounts are maintained and statutory audit of the same is carried out by a qualified Chartered Accountant, there seems to be no reason for rejection of books of account. In view of submissions made by the AR, reliance placed by his on various case laws, remarks of my predecessor and facts of the case. This ground is, therefore, allowed. 16. It is pertinent to note that the AO while computing the total income has rejected the claim of loss for want of tax audit report and other details and even refused to entertain the CA for want of power of attorney though the reply along with balance sheet and other details as well as statutory audit report were filed before the AO. The AO even did not allow the brought forward loss which were allowed in the preceding year to be carry forward and therefore, it shows that the AO has passed the assessment order by ignoring the undisputed facts available before him and rather contrary to the fact so far as the brought forward loss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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