9911796707
TMI Blog2014 (7) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... be noticed. The assessee is a partnership firm engaged in the business of manufacture and sale of wheat products. For the A.Y. 2003-04, it filed a return showing income of Rs. 34,71,660/- and claimed the entire amount as deduction under Section 80IB thereby returning the total income at Nil. This was the fifth year of deduction under Section 80IB. In the course of assessment proceedings, the Assessing Officer (hereinafter referred to as 'A.O.') noticed certain discrepancies in the accounts and also sought to verify the correctness of balances shown in the accounts of about 325 creditors and debtors by issuing inquiry letters to them. While account confirmations were received in respect of about 95 such parties, the letters issued to 143 oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstated by Rs. 39,75,300/-. Further, in respect of some other local purchases of raw material, the closing stock was over stated by 3.94 quintals. h) Purchases aggregating to about Rs. 6.5 lacs were entered in the books but no purchase bills were found. i) In respect of sales, the quantity recorded in the sales register was different from that in the sale bills in 21 instances. In certain other instances of sales, the amount of sales had been shown less by an amount of Rs. 21,466/-. j) No brand wise stock register was maintained. 4. Since most of the accounts of debtors and creditors were not confirmed, stock records were not properly maintained, and in view of the findings of the special auditors, and further taking into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee and infact there is no finding by the A.O. as to how the accounts maintained were incomplete or incorrect. It was held by the ITAT that variation in profit rate and the level of expenses in different years was not sufficient reason to hold that the accounts were defective. It was also noted that a special audit had been conducted under Section 142(2A), but it was observed that the A.O. has made no reference to any adverse remarks of the Auditor in the assessment order. It was also held that non maintenance of stock records was not shown to adversely affect the correctness or completeness of the accounts. Thus, the ITAT held that there was no justification on the part of the A.O. for invoking Section 145(3) and rejecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of the A.O., the findings returned by the ITAT were clearly erroneous. It is further claimed that it was the duty of the A.O. to invoke the provisions of Section 145 and compute the correct profit after rejecting the accounts of the assessee. In the present case, the A.O. had brought out several discrepancies in the assessment order which showed that the accounts as filed by the assessee did not reflect the correct profit. 10. On the other hand, Shri Atul Jhingan, learned counsel for the respondent has supported the order passed by the ITAT as being strictly in conformity with law. 11. We have considered the rival submissions of the learned counsel for the parties carefully and meticulously. In this case, the dispute regarding scal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is required to make the assessment in the manner provided under Section 144 of the Act. Meaning thereby, that the Assessing Officer is authorized to make assessment of total income of the assessee on the basis of "best judgment" and, at the same time, disregard the income declared in the return. Therefore, the existence of infirmities and discrepancies in the accounts maintained by the assessee was a pre-requisite for invoking the provisions of Section 145 ibid. However, what appears in the present case is that the Assessing Officer had merely doubted trading results declared by the assessee. There were no findings as to how the accounts maintained by the assessee were either incomplete or incorrect. 13. The Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained by the assessee. Therefore, prima facie, the absence of any adverse remarks by the Special Auditor definitely supports the case of the assessee. The entire action of the A.O. appears to be based more on suspicion than on ground reality. In such circumstances, the accounts of the assessee could have been got reinvestigated but the same could not have been rejected. 15. The findings recorded by the CIT (A) and the ITAT are based on true appreciation of facts and correct appreciation of the provisions of law and there is nothing on record to suggest or even infer that the said findings are in any manner perverse. A finding on a question of fact is open to attack only in case the same is erroneous in law or where the said finding can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
