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2016 (1) TMI 41 - AT - Income TaxDetermination of taxable income - Best Judgment Assessment u/s 144 - disallowance of depreciation and sundry creditors - Held that:- CIT(A) has restored some of the issues to the AO for verification and allowance to the assessee, particularly with respect to set off of brought forward loss. In the grounds of appeal extracted (supra), the Revenue has pleaded that the ld.CIT(A) has upheld the depreciation of ₹ 1,49,07,251/- but in the computation of income no such deprecation as claimed by the assessee. The claim of depreciation is of ₹ 62,95,561/- only. It is also pertinent to note that the AO has made disallowance out of the sundry creditors. He made ad hoc disallowance at 20%. It is totally unheard. Whether sundry creditors are genuine or not genuine ? How they can be non-genuine to the extent of 20%. In other words, either total sundry creditors are genuine or all the sundry creditors genuine unless pointed out specifically. There cannot be any ad hoc disallowance out of these items. This appears to us that though the assessment was framed under section 144 of the Income Tax Act, according to the best judgment of the AO, but the AO failed to collect details by exercising his power in order to determine the fair income of the assessee. He ought to have looked into the earlier and subsequent years details available with the department before determining the income of the assessee. While he considering all these aspects, we set aside both the orders of the Revenue authorities and restore all the issues to the file of the AO for re-adjudication. The ld.AO shall issue notice to the assessee, and thereafter, determine taxable income of the assessee, if any. - Decided in favour of revenue for statistical purpose.
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