TMI Blog2014 (4) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... lized during the relevant financial year in question, then the claim of the assessee is allowable and no disallowance can be made in this regard. The AO has made a lump sum trading addition by estimating ad hoc income of assessee at Rs.10 lakh after rejection of books of accounts u/s 145(3) of the Act - it is not open to the AO to uphold other disallowances and addition on other counts and on the basis of results of rejected books of accounts - except lump sum ad hoc trading addition of Rs. 10 lakh, other disallowances and addition made thereunder are not sustainable. Lump sum ad hoc trading addition – Held that:- Since the AO found anomalies and discrepancies in the books of accounts of the assessee and on this basis, the AO rejected bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles of law. (SC 5 ITR 170; 76 ITR 690; 336 ITR 400) 2. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the best judgment addition by. Ld AO of Rs 10,00,000 to assessee's income which is not supported by cogent material much less comparable cases, from which depreciation needs to be separately considered and allowed etc. 3. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the individual disallowances and additions on basis of rejected books u/s 145(3) which approach is not in accordance with law, namely: a) Adhoc Trading addition Rs. 10,00,000/- b) Disallowance out of donation Rs. 26,100/- c) Disallowance of loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss on sale of car, interest on TDS, claim of excise duty, tours and traveling expenses, purchase charges, salary expenses and ad hoc trading addition of Rs. 10 lakh was also upheld. Now, the aggrieved assessee is again before this Tribunal in the second appeal. Ground no. 1 to 3 5. Apropos these grounds, we have heard rival arguments of both the parties and carefully perused the entire record including decisions of Hon ble High Court and Coordinate Benches of the Tribunal as relied by both the parties. Ld. counsel of the assessee has placed detailed submissions which can be summarized on following points:- i) the Commissioner of Income Tax(A) erred in not assessing the income of the assessee on the basis of unimpeached audited b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the authorities below and submitted that the appeal of the assessee is devoid of merits. 7. On careful consideration of above submissions of both the parties, we observe that the Assessing Officer has made certain disallowances on various counts and in addition to that, the Assessing Officer has also made lump sum ad hoc trading addition of Rs. 10 lakh. The ld. counsel of the assessee during the argument submitted a copy of Schedule XI of final accounts of the assessee as on 31.3.2006 and submitted that the assessee submitted security with the Central Excise Department on account of basic Excise Duty (BED) amounting to Rs. 20 lakh and out of which Rs.19,55,326 were adjusted and debited as additional excise duty as determined by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.10 lakh after rejection of books of accounts u/s 145(3) of the Act, then it is not open to the Assessing Officer to uphold other disallowances and addition on other counts and on the basis of results of rejected books of accounts. Accordingly, except lump sum ad hoc trading addition of Rs. 10 lakh, other disallowances and addition made thereunder are not sustainable and we set aside the findings of the authorities below and Assessing Officer is directed to delete this addition. 9. Coming to the issue of lump sum ad hoc trading addition of Rs.10 lakh, we are of the view that when the Assessing Officer has found many anomalies ad discrepancies as discussed in the assessment order, then the Assessing Officer was right in rejecting the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p sum trading addition was not based on cogent and justified basis. Therefore, we are inclined to set aside the order of Assessing Officer pertaining to estimated trading addition and this issue is restored to the file of Assessing Officer with a direction that the estimated trading addition shall be made after considering previous and subsequent year book results of the assessee or in the light of suitable comparable. Needless to say that the Assessing Officer shall provide suitable opportunity of hearing for the assessee during this proceeding and assessee shall cooperate with the Assessing Officer. To sum up, the action of the Assessing Officer in rejecting the books of accounts of the assessee u/s 145(3) of the Act is upheld. The disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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