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2015 (11) TMI 4 - ITAT CHENNAI

2015 (11) TMI 4 - ITAT CHENNAI - TMI - Penalty u/s.271(1)(c) - AO observed that the assessee firm had not furnished the audit report U/s.44AB - Held that:- Assessing Officer has not heeded to the request of the assessee to while invoking the provisions of Section.44AF of the Act with respect to its actual turnover. It appears that AO had computed 5% of the turnover declared in the return of income or admitted by the assessee whichever is higher. On this issue, considering the facts and circumsta .....

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imed interest paid to its partners as allowable deduction in accordance with Section 44AF(2) of the Act. The Ld. CIT (A) has not examined this issue in detail but brushed aside the claim of the assessee by stating that no evidence is available before him to establish that the interest has been actually paid to the partners. On this issue, we are of the considered view that one more opportunity should be provided to the assessee to furnish the evidence in regard to the payment of the interest to .....

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e of the assessee’s case and sprung into action to assess the income of the assessee invoking various provisions under the Act. From the facts and circumstance of the case we are also of the view that adverse inference need not to be drawn on the bona fide act of the assessee for filing the return of income thought beyond the time prescribed U/s.139(4) of the Act, when no other adverse facts emerge. Further we are of the considered view that this is not a case where the assessee has concealed it .....

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t appeals out of which four appeals relate to quantum appeals and the other four penalty appeals. The assessee is in appeal before us aggrieved by the separate orders of the Learned Commissioner of Income Tax(Appeals), Puducherry with respect to quantum addition in IT Appeal No.354/CIT(A)-PDY/13-14, in IT Appeal No.353/CIT(A)-PDY/13-14, in IT Appeal No.352/CIT(A)- PDY/13-14, in IT Appeal No.351/CIT(A)-PDY/13-14 vide order dated 25.03.2015 passed under section 143(3) r.w.s. 147 of the Act and wit .....

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als. 2.1 QUANTUM APPEALS IN ITA Nos.1461,1463,1465 & 1467/Mds./15 In all these above quantum appeals, the assessee has raised several grounds, however the crux of the issue is that the Assessee is aggrieved by the orders of the Ld. CIT (A) for having confirmed the order of Ld. Assessing Officer who had invoked the provisions of section 44AF of the Act and not deducted the interest on fixed capital while framing the assessment order. Penalty appeal in ITA No.1462,1464,1466 & 1468/Mds./15 .....

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declared in the return of income ( ) Turnover revised at the time of hearing Total Income declared( ) Remark 1 2004-05 26.03.2009 28,27,956 29,09,999 (-) 3,500/- Filed beyond the time limit specified u/s.139(4) of the Act. The return was lodged. 2 2005-06 26.03.2009 32,03,700 32,03,700 7,247/- Filed beyond the time limit specified U/s139(4) of the Act. The return was lodged. 3 2006-07 26.03.2009 26,53,510 30,73,077 5,591/- Filed beyond the time limit specified U/s.139(4) of the Act. The return .....

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the Act computed the income of the assessee at 5% of the turnover as follows:- Sl. No. A.Y Turnover ( ) Income computed by A.O at 5%of turnover ( ) 1 2004-05 29,09,999 1,45,500/- 2 2005-06 32,03,700 1,60,185 3 2006-07 30,73,077 1,53,644 4 2008-09 27,72,623 1,38,631 3.1 On appeal the Ld. CIT (A) upheld the order of the Ld. Assessing Officer. The relevant para of the decision of the Ld. CIT (A) is reproduced herein below for reference:- 5.2 All the grounds of appeal filed are for the disallowance .....

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44AF(2) prescribes for allowability of interest paid to its partners if the interest is actually paid to the partners. In the instance case, no evidence is available as to whether interest was actually paid to the partners. Hence, the grounds of appeal filed by the appellant are rejected. 4. After examining the issue, we do not find any infirmity in the order of the Ld. Assessing Officer and the Ld. CIT (A) because the assessee has not maintained books of accounts and has not produced vouchers, .....

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is issue, considering the facts and circumstances of the case, we are of the considered view that, the Ld. Assessing Officer should have computed 5% of the turnover on the actual turnover admitted by the assessee irrespective of the amount declared in the return of income because the claim of the assessee appears to be genuine. Therefore, we hereby direct the Ld. Assessing Officer to compute 5% of the turnover as admitted by the assessee and not as declared by the assessee in its return of incom .....

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