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TMI Blog2024 (7) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... ill and were passing through severe financial crunch and were not in a position to pay the self assessment tax and thereby the non-compliance and the assessment completed based on estimation of profit. The assessee subsequently when the proceedings were pending before the ld. CIT(A) and that of ITAT paid the taxes and matter was set aside and in that profit in this year profit was estimated @ 5 %. But looking to the past history of profit and assessee s nature of business estimation of profit @ 5 % is on higher side and at the same time since the assessee has not provided the details in assessment proceeding we deem it fit in the interest of justice to considered higher disclosed by the assessee @ 1.33% in the Assessment Year 2011-12, which should be considered as basis for estimating the net profit for the year under consideration. Based on these observations, the ground No. 1 raised by the assessee is partly allowed. Separate Addition towards Income from Interest and commission and Income from Rent - submission of additional evidences - HELD THAT:- We allow that additional evidence and direct the ld. AO to verify whether the assessee has disclosed the income towards the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat since the assessee company had not filed ITR, his case appears in the list of Nonfilers under NMS Priority-1. The revenue has also the information that the assessee deposited cash amounting to Rs. 3,87,07,178/- in the bank account, received interest, rent and commission or brokerage amounting to Rs. 9,27,658/-. The assessee also received contract receipts amounting to Rs. 24,41,852/- during the F.Y. 2012-13. Based on that information and since the assessee had not filed any ITR a notice u/s 148 of the IT Act, 1961 was issued on 27/09/2016 after recording due reasons and obtaining necessary satisfaction as provided u/s 151(2) of the Act. 5.1 The notice issued u/s 148 of the Act was served upon the assessee. However, the assessee not made any compliance to that notice. Again, upon change of incumbent, notice u/s 142(1) of the Act along with a show cause notice for finalizing assessment u/s 144 of the IT Act, 1961 was issued on 13/12/2017 and final date of compliance was fixed for 18/12/2017 again no response to said notice received from the assessee by the ld. AO. Meanwhile ld. AO called for information u/s 133(6) of the Act from the bank where the assessee company held its accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order. Therefore, the Hon'ble ITAT directed that the on the ground of tax payment made by the appellant supported by tax challans submitted during the proceedings before the Hon'ble ITAT, the appeal by the appellant should be admitted and adjudicated on merits. The tax payment made by the appellant are as under: - Sr No Date Amount (Rs) Remarks BSR Code/Challan No 1. 28/01/2014 1,00,000/- 0290179/20232 2. 11/04/2014 2,00,000/- 0290179/20168 3. 05/03/2018 3,00,000/- 6390340/07677 4. 14/03/2018 2,00,000/- 6390340/02995 5. 25/02/2020 5,00,000/- 6910333/51404 Total 13,00,000/- The appellant has submitted copies of the challan for the tax payment. As per the Computation of Income filed by the appellant the tax payable comes to Rs 12,68,985/-. Thus, the tax payment by the appellant exceeds the advance tax payable. Therefore, in compliance of the directions of the Hon'ble ITAT given ITA No 263/JP/2020 on 30/07/2021, the appeal filed by the appellant is adjudicated as discussed below. 6.2. In the case of the appellant, it was seen that return of income for AY 2013-14 was not filed. Information of record showed that appellant had deposited cash amounting to Rs 3,87.07,178/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as now filed Audited Balance Sheet and Profit Loss Account alongwith the schedules, receipt for filing of audited statements with the Registrar of Companies and Computation of Income prepared on the basis of the Audited Statements as additional evidence u/s 46A(1)(c) of the Income Tax Act. In the background of the appellant's request, Rule 46A of the Income Tax Rules is reproduced for the sake of clarity: - 46A. (1) The appellant shall not be entitled to produce before the [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely - (a) where the Assessing Officer has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer, or (b) (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or (d) where the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Portal. Therefore, this explanation given by the appellant is not plausible. (ii) The appellant has produced copy of Challan dated 25/10/2013 through which an amount of Rs 500/- has been paid as Fee for Form 23AC for financial year ending 31/03/2014 in case of the appellant. The challan by itself cannot be treated as an acknowledgement for filing of the Financial Statements which would get generated on valid filing of the Financial Statements. Therefore, the challan cannot be treated as evidence of the existence of Financial Statements. It is also pertinent to note that appellant did not comply with any of the notices issued to it in the re-assessment proceedings. It neither filed return of income in response to notice u/s 148 of the IT Act nor did it produce the Financial Statements or Books of Accounts. The financial statements are prepared on the basis of the Books of Accounts maintained in the normal course of the business. The Books of Accounts are written on the basis of subsidiary record consisting of sale bills, purchase bills. expense bills/vouchers, cash receipts issued, record of stock and bank statements. In absence of books of accounts and the subsidiary record, the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a faculty to decide matters with wisdom truly and legally, but on settled on invariable principles of justice. Though there is an element of guess work in a best judgment assessment, it shall be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case Though arbitrariness cannot be avoided in such estimate the same must be capricious but should have a reasonable nexus to the available material and the circumstances of the case. The AO has to make estimate but a fair estimate AO has to make guess work but honest guess work. AO has to make assessment not one sided but neutral. AO has to gather the material which he can at best possible Without going through the matenal, without gathering the material, with reading the maternal, without giving an opportunity to the assessee without issuing the show cause notice to the assessee the assessment done is bad in law and spints and at best is made null and void in the court of law. In the circumstances, there is no rationale whatsoever for estimating the gross turnover at Rs 36.00 crores. The appellant's claim that total revenue of the appellant in AY 2014-15 is Rs 31.02.66.644/- is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from business and no expenses are allowed. The ground of appeal fails. 8. In the result, the appellant's appeal is PARTLY ALLOWED. 7. As the appeal of the assessee was allowed in part and aggrieved from that order of the ld. CIT(A), the assessee preferred the present appeal before this tribunal on the grounds as stated herein above. The assessee though the ld. AR filed a detailed written submission in support of the grounds so raised, which is reiterated here in below; The humble appellant most respectfully bag to submit: 1. The assessee due to an bonafide oversight while preparing the Form No.36 has escaped the following Ground of Appeal, which may kindly be admitted and placed on Record as additional Ground of Appeal: Under the facts and circumstances of the case the ld. CIT(A) is not justified in rejecting the Application for Admission of Additional Evidences u/r 46A(1)(c) of IT Rules 1962. 2. The brief facts of the case may kindly be considered as follows: 1. The appellant is a Pvt Ltd. Company dealing in Automobile Vehicles of Tata Motors Ltd. 2. The assessee got it's Books of Accounts Audited as per relevant provisions of Companies Act, 1956 and IT Act, 1961 and disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit Report in Form No.3CA and 3CD e-filed on Web Site of IT Department. (PB No.42-50) (6) Computation of Total Income on the basis of Audited Balance Sheet and Profit and Loss Account showing Total Income of Rs. 4106750/- (PB No.51) 12. The assessee prayed before CIT(A) to assess/direct the AO to assess at Rs. 4106749/- as per computation of Total Income/issue any other directions to the AO/assessee as deemed fit in the interest of justice. 13 . The ld. CIT(A) rejected the application for admission of additional Evidences and without appreciating the Audited Financial Statements and corresponding Computation of Total Income and without making any further inquiry either from the assessee or from the the AO estimated the Net Profit of the assessee of Rs. 17095760/- by applying NP Rate of 5% on Estimated Gross Receipts of Rs. 341915196/. 14. The ld. CIT (A) further directed to make separate addition of Rs. 317048/- and of Rs. 221800/- towards Inocme from Interest Commission and Rent. Submission: Additional Ground of Appeal: 1. The ld. CIT(A) has rejected the application for admission of additional Evidences on the ground that: (i) The assessee has not produced any evidence regarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any real finding towards any defects therein. 10. Without prejudice to the above the ld. CIT(A) is also not justified in taking NP Rate of 8% against that of 1.33% and 1.10% in preceding A.Y.2011-12 and 2012-13 respectively as observed by the ld. CIT(A) himself. 21. Therefore Your Honour is requested to assess at Rs. 4106749/- as per Audited Financial Statements and corresponding computation of Total Income or issue any other directions to the AO/assessee as deemed fit in the interest of justice. 8. To support the contention so raised in the written submission reliance was placed on the following evidence / records /: S.No. Paper/document Page No. 1. Written Submission dated 02.12.2023 before ld. CIT(A) 1-4 2. Order dated 27.03.2019 of ld. CIT(A) in original Appellate Proceedings 5-6 3. Self Assessment Tax Deposit Challans 7-8 4. Order Dated 30.07.2021 of this Hon. Bench in original Appellate Proceedings. 9-20 5. Application u/r 46 A of IT Rules 1962 before ld. CIT(A) in Set aside Appellate Proceedings, for admission of Additional Evidences 21-22 6. Audited Balance Sheet and Profit Loss Account along with Schedules. 23-37 7. Receipt dated 25.10.203 of E- filing of Audited Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings on 28/12/2017. Similarly, no evidence has been produced to substantiate the illness of the Director's spouse. It was also not demonstrated that the Audit Report had been uploaded on the Income Tax Portal. The financial constraints leading to non- payment of self-assessment tax would not prevent the appellant from uploading its Tax Audit Report and the Audited Financial Statements on the Income Tax Portal. Therefore, this explanation given by the appellant is not plausible. (ii) The appellant has produced copy of Challan dated 25/10/2013 through which an amount of Rs 500/- has been paid as Fee for Form 23AC for financial year ending 31/03/2014 in case of the appellant. The challan by itself cannot be treated as an acknowledgement for filing of the Financial Statements which would get generated on valid filing of the Financial Statements. Therefore, the challan cannot be treated as evidence of the existence of Financial Statements. It is also pertinent to note that appellant did not comply with any of the notices issued to it in the re-assessment proceedings. It neither filed return of income in response to notice u/s 148 of the IT Act nor did it produce the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the tax audit report and prayed that the profit is required to be estimated based on the audited accounts and book result declared by the assessee considering the peculiar facts placed on record. 12. We have heard the rival contentions and perused the material placed on record. The bench noted that this is the second round of litigation and in the first round the appeal of the assessee not decided on merits by the ld. CIT(A) as the assessee failed to pay the due tax and has not filed the return of income. The ITAT in the first round considering the fact that where the admitted taxes are paid at a later point of time, the appeal of the assessee should be considered as properly instituted and should be heard and decided by the ld. CIT(A) on merits. In that proceeding the ld. CIT(A) has not considered the plea of additional evidence and the profit which was estimated by the ld. AO @ 8 % was reduced to 5 %. 13. Since this being the second round of litigation and the lower authorities have already considered the estimation of profit, considering the nature of business done by the assessee. As argued by the ld. DR that in the absence of the details the estimation of the profit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit for the year under consideration. Based on these observations, the ground No. 1 raised by the assessee is partly allowed. 14. As regards ground No. 2 3, the ld. AR of the assessee stated that since the interest, commission and rent are part and parcel of books of accounts for which the additional evidence petition was filed before the ld. CIT(A) was not considered but before us considering the facts and circumstances of the case discussed herein above, we allow that additional evidence and direct the ld. AO to verify whether the assessee has disclosed the income of Rs. 3,17,048/- towards the interest and commission and Rs. 2,21,800/- and thereby the profit is offered no separate addition is called for. Based on these observations, ground Nos. 2 3 raised by the assessee are allowed for statistical purposes. In terms of these observations, appeal of the assessee is partly allowed. 15. The fact of the case in ITA No. 344/JP/2024 is similar to the case in ITA No. 343/JP/2024 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this appeal No. 344/JP/2024 is equally similar on set of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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