2021 (1) TMI 462 - ITAT VISAKHAPATNAM - Income Tax

Head Note / Extract:
Estimation of income - suppression of income or the inflation of purchase or inflation of expenditure - search u/sec. 132 was conducted - assessee filed return of income disclosing loss u/s 139(1) and subsequently revised the loss duly decreasing the loss which was admitted as undisclosed income during the course of search - HELD THAT:- In the instant case, it is clear from the discussion that there was no material and no defects were pointed out by the AO. Even though search was conducted no evidence was found by the AO evidencing the suppression of income or the inflation of purchase or inflation of expenditure. The assessee has maintained regular books of account which are duly audited. A search u/sec. 132 was conducted but no evidence was found indicating concealment of income. In the case of Pr.CIT Vs. Marg Ltd. [2017 (7) TMI 823 - MADRAS HIGH COURT] held that profits of the assessee cannot be estimated without rejection of books of account. In the case of Dhakeswari Cotton Mills Ltd. Vs. CIT [1954 (10) TMI 12 - SUPREME COURT] held that AO is not entitled to make a pure guess work or suspicion without any reference or without any material at all. Taking into consideration of all the above aspects, in the instant case, there is no basis for estimation of income, therefore, estimation of income without having any seized material or any material is bad in law, Hence, we uphold the order of the ld. CIT(A) and dismiss the appeal of the Revenue.