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2015 (11) TMI 1444 - ITAT MUMBAI

2015 (11) TMI 1444 - ITAT MUMBAI - TMI - Estimation of Income - estimation of the assessee’s income, primarily on the basis of advance tax paid and rejection of books of account - CIT(A) deleted the addition - Held that:- Revenue has failed to contravene the finding of the Ld. CIT(A) in the impugned order that the Assessing Officer’s estimation of the assessee’s income, primarily on the basis of advance tax paid and rejection of books of account without finding any discrepancy or suppression of .....

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rward and set off of business loss and unabsorbed depreciation - CIT(A) allowed the claim - Held that:- As observed by the Ld. CIT(A), it is clearly evident that the Assessing Officer had not examined the assessee’s claim for carry forward and set off of earlier year’s business losses and unabsorbed depreciation. Revenue’s contention that the Ld. CIT(A) had directed the Assessing Officer to allow the assessee’s claim in this regard is factually incorrect. The Ld. CIT(A), as observed that since t .....

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ugned order of the Ld. CIT(A) wherein the Assessing Officer has examined and adjudicated on the assessee’s claim for carry forward and set off of unabsorbed losses and depreciation. - Decided against revenue - ITA No. 5616/MUM/2013 - Dated:- 20-11-2015 - Shri Jason P. Boaz Accountant Member And Shri Ram Lal Negi, Judicial Member For the Appellant : Ms. Savita Bundas For the Respondent : Shri Rakesh Joshi ORDER Per Jason P. Boaz, A. M This appeal by the Revenue is directed against the order of th .....

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₹ 10,98,47,11,129/-. The assessee subsequently filed revised return of income on 29/3/2012 declaring loss of ₹ 10,90,99,86,534/- and again on 28/9/2012 declaring loss of ₹ 11,07,08,83,371/-, which included unabsorbed depreciation of ₹ 5,04,44,93,834/- and business loss of ₹ 6,00,63,89,537/-. The assessment was completed under section 143(3) of the Act vide order dated 28/2/2013, wherein the income of the assessee was estimated at ₹ 91,00,00,000/-(net of losses .....

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isposed of the assessee s appeal vide order dated 28/6/2013, allowing the assessee partial relief. 3. Revenue, being aggrieved by the order of the CIT(A)-39, Mumbai has preferred this appeal raising the following grounds:- 1. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in disallowing the addition made by the AO on the basis of advance tax & by investigating six points i.e. fluctuation in GP ratio, erratic yield ratio from sponge and plant, difference in commission .....

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f of unabsorbed business loss and depreciation of earlier years & apply the relevant provisions of the Act for the purpose determining the correct figure of loss. 3. The Appellant craves to leave to add, to amend and/or to alter any of the grounds of appeal, if need be. 4. The appellant, therefore, prays that on the grounds stated above, the order of the CIT(A)-39, Mumbai may be set aside and that of the Assessing Officer be restored. 4. The grounds raised at Sl.Nos. 3 & 4 are general in .....

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grave;-vis details given to Service Tax authority; (iv) power and fuel consumption vis-à-vis total turnover; (v) comparison of G.P. ratio of the appellant with other companies and (vi) huge amount of advance tax of ₹ 29.00 crores paid in March, 2011. The Ld. DR was heard in support of the ground raised and placed reliance on the order of the Assessing Officer on this issue. 5.2 Per contra, the Ld. AR supported the impugned order of the Ld. CIT(A) on this issue. The Ld. AR reiterated .....

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R. Enterprises reported in (2013) 350 ITR 489(SC), wherein it has been held that it would be difficult to accept the plea that the payment of advance tax is tantamount to the disclosure of income or that it indicates the intention of the assessee to disclose commensurate income in the return of income. 5.3.1 We have heard the rival contentions and perused the material on record. According to the Assessing Officer, in view of the fact that (i) the assessee paid advance tax of ₹ 29.90 crores .....

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ks of account and estimation of income at ₹ 91.00 crores on the basis of advance tax payments. 5.3.2 It is seen that the Ld. CIT(A) after examining the Assessing Officer s findings and the submissions of the assessee was of the view that if material defects or anomalies were found in the assessee s books, it would be a basis for estimation of income. The Ld. CIT(A) observed that, however, in the case on hand, the estimation of the assessee s income by the Assessing Officer based on advance .....

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ly on the basis of the advance tax paid. What is required to be examined is whether the estimate based on the advance tax paid can be equated with the total taxable income of a previous year. A low G.P. by itself is certainly not a valid reason for rejecting the book results and estimation of income. Certainly if there are material defects, the income can be estimated but it has to be on a sound basis. Certainly, if there are anomalies noticed in the books as maintained it calls for addition/dis .....

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and that a declaration was made cannot be lost sight of. When a declaration is made consequent to a search, taxes commensurate with the declaration have to be remitted. This argument raised by the appellant, on the facts of this case, cannot be lost sight of. 9.4 Apart from pointing out certain anomalies, no major defects in the books of accounts maintained by the appellant have been pointed out by the A.O. It is reckoned that the appellant is a widely held public company and that its accounts a .....

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he advance tax is paid on estimate of income and is not the final tax payment; there could be excess payment or short payment. In fact it is during the process of assessment that the A.O. has to correctly determine the assessable income and the taxes due. As per the provisions of sec. 209 which lays the method for computation of advance tax, it is stipulated that the assessee shall first estimate its current income and income tax there on has to be calculated. After the said estimation of curren .....

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ery nature has an element of guess work and hence prone to be inaccurate. For the said reasons, it has to be held that the payment of taxes cannot be a basis for estimation of income. Therefore, I am unable to sustain the action of the A.O. in assessing the total income at ₹ 91 Crs. also ignoring the accumulated losses as determined in the earlier years as per returns of income filed. 5.3.2 Before us, Revenue has failed to contravene the finding of the Ld. CIT(A) in the impugned order that .....

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he case, we uphold the action of the Ld. CIT(A) in deleting the Assessing Officer s estimation of the assessee s income at ₹ 91.00 crores. Consequently, Ground No.1 of Revenue s appeal is dismissed. 6. Ground No.2 - Carry forward and set off of business loss and unabsorbed depreciation: 6.1 In this ground, Revenue contends that the Ld. CIT(A) erred in directing the Assessing Officer to allow carry forward and set off of brought forward business loss and unabsorbed depreciation of earlier y .....

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