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2019 (2) TMI 1637 - AT - Income TaxAssessment u/s 153A - AO has estimated the income by comparing the results of assessee with that of another company M/s VRL Logistics - AO has estimated income of the assessee by comparing the net profit by bringing in the results of a company, called M/s. VRL Logistics and has adopted a net profit of 6.54 percentage and estimated the income of the assessee - HELD THAT:- We note that the assessment year 2014-15 was pending on the date of search, so A.Y. 2014-15 is an abated assessment and A.Y. 2015-16 is the year when search took place, therefore scrutiny under 143(3) was carried out in respect of Assessment Year 2015-16. We note that while doing section 153A assessment in the abated proceedings, the AO has no restrictions as in the case of unabated proceedings are concerned. Estimation of incom - according to the ld. AR, the assessee did not get any opportunity to challenge the action of the Assessing Officer to take the case of M/s VRL Logistics as comparable and also the AO did not give any opportunity to the assessee to bring its own comparables - HELD THAT:- We note that the DR could not controvert these facts pointed out by the AR challenging the action of Assessing Officer in respect of bringing M/s VRL Logistics as comparable and not giving opportunity to assessee to bring its own comparable to justify the net profit/gross profit of the assessee company.The aforesaid action of the AO cannot be countenanced by us. If the AO found fault with the books which assessee has regularly maintained, and which are admittedly audited, and in case if the AO was of the opinion that the assessee has not regularly followed the method of accounting as mentioned u/s 145(1) of the Act or that the assessee has not computed the income in accordance with accounting standard notified u/s 145(2) and if the AO was not satisfied with the correctness of the accounts of the assessee, then AO was at liberty to make an assessment in the manner provided u/s 144 which is the best judgement assessment. However, before doing so, he has to grant an opportunity of being heard as prescribed u/s 144 of the Act. Without doing so, the AO ought not to have gone to estimate the net profit of the assessee and moreover before bringing in any comparable like that of M/s VRL Logistics, the assessee must have been given notice calling upon the assessee’s objection, if any, and also given opportunity to the assessee to bring any comparable cases if it desires so and then only A.O to have carried out the exercise of estimation in a reasonable and just manner. Failure to do so, vitiates the impugned order. We, therefore, set aside the order of the Ld. CIT(A) and estimation made by the A.O and remand the matter back to the AO for first to decide whether to reject or not the books of accounts maintained by the assessee in the light of section 145 and judicial precedence in respect of the same in accordance to law.
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