TMI Blog2009 (8) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. At the outset, the learned Authorized Representative, the assessee's counsel, assailed the framing of assessment under s. 144 of the IT Act, 1961 ('the Act' hereinafter), alleging that the same stood made only to enable the AO to disallow the assessee, a partnership firm, in the business of civil construction, on contract basis, its just claim for salary and interest to partners, being in terms of the partnership deed. The learned Departmental Representative vehemently opposed the said charge, claiming the assessment to have been made and confirmed by the first appellate authority after due consideration of all the relevant factors. The assessment, in fact, stood enhanced by the learned CIT(A), even as he confirmed the assessment under s. 144, in view of a series of non-compliances by the assessee, correctly observing that, in fact, in law even non-compliance of a single notice would be sufficient for invoking the provision of s. 144 of the Act, i.e., framing assessment by the AO on best judgment basis. 3. We have heard the parties, and perused the material on record. The assessee, we find to have neither rebutted nor even denied the various non-compliances a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act were also issued to the proprietors of the three concerns subsequently and their statements recorded thereunder, and whereby they denied having issued the said confirmation letters, even denying any transaction with the assessee, save to the extent of ₹ 6,78,790 (by M/s Popular Traders). Further, all of them also confirmed of no sum being receivable from the assessee-firm as at the end of the financial year 2004-05, i.e., the previous year relevant to the current assessment year. The AO confronted the assessee with the said material, vide his letter dt. 19th Nov., 2007, to no response. The assessee also failing to justify different expenses as claimed per its P L a/c, the same stood allowed by him at 97 per cent of the claimed amount, following the principle that for every receipt, there must be, nevertheless, a corresponding expenditure; the assessee's failing to exhibit reliability of its accounts. Accordingly, 3 per cent of the claimed expenditure of ₹ 282.31 lacs, i.e., ₹ 8,46,940, stood consequently disallowed by him, besides ₹ 8,22,724 claimed as dues to three creditors aforesaid under s. 69A of the Act on the premise that the same repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rebutted by the assessee even before us, the assessment under s. 144 only follows in consequence. Even as observed by the Bench during the hearing, there is no law that the deeming provision of s. 68 or s. 69A for the matter, would not apply in a case where there has been an estimation of income consequent to the rejection of the assessee's accounts; the matter being entirely factual, with the requisite onus towards the same being on the assessee, which we find to have not discharged it at all in the present case. Reference in this context is drawn to the decisions by the apex Court in the cases of CIT v . Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) and CIT v . Manick Sons [1969] 74 ITR 1 (SC), wherein it stands clarified that the assessment in all cases is to be made with reference to the peculiar facts of the case, and the AO is not precluded from invoking s. 68 where he estimates the income by applying a percentage. So however, and without prejudice to the foregoing, we find the assessee's claim as devoid of merit. There is, in fact, no rejection of its accounts, by the AO under s. 145 of the Act, as was the case in the case of Rajhans v . ITO [ITA No. 293 (Ctk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in reckoning cash purchases, and which (denial) has not been controverted by the assessee, rather, not even having been attempted at, only implies either no purchases to that extent, or purchases from others (to whatever extent). The Revenue, by following the second implication, has only adopted a more rational and considered view in as much as the factum of sales/execution of work itself proves the purchases, though their quantum cannot be ascertained with reasonable accuracy, while the first inference would lead to a total disallowance. In fact, the Revenue under such situations, i.e., of unproved purchases, usually adopts the course of disallowance of a part thereof on the premise that the assessee would have not purchased from the ostensible source only to save on some tax or circumvent any disability or impediment involving pecuniary benefit. The Ahmedabad Benches of the Tribunal have in like cases adopted a consistent view by disallowing twenty-five per cent of the impugned purchases. In the present case, however, the disallowance is under s. 40A(3) of the Act, which presumes deductibility under s. 37(1), so that the scope of the issue before the Tribunal is to examine the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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