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ACIT, Cir. 1 Surat Versus M/s. Proximus Knowledge & Tech. Services P. Ltd.

2016 (1) TMI 41 - ITAT AHMEDABAD

Determination of taxable income - Best Judgment Assessment u/s 144 - disallowance of depreciation and sundry creditors - Held that:- CIT(A) has restored some of the issues to the AO for verification and allowance to the assessee, particularly with respect to set off of brought forward loss. In the grounds of appeal extracted (supra), the Revenue has pleaded that the ld.CIT(A) has upheld the depreciation of ₹ 1,49,07,251/- but in the computation of income no such deprecation as claimed by t .....

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these items. This appears to us that though the assessment was framed under section 144 of the Income Tax Act, according to the best judgment of the AO, but the AO failed to collect details by exercising his power in order to determine the fair income of the assessee. He ought to have looked into the earlier and subsequent years details available with the department before determining the income of the assessee. While he considering all these aspects, we set aside both the orders of the Revenue .....

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l before us against the order of the CIT(A)-I, Surat dated 26.4.2012 passed for the Asstt.Year 2009-10. 2. The appeal was posted for hearing on 28.8.2012. None appeared on behalf of the assessee. Therefore, fresh notice was issued on 26.10.2012. Shri R.C. Jain, ld. Counsel for the assessee appeared and hearing was adjourned. Thereafter, the assessee moved an application for adjournment which was also allowed. However, on the date of hearing i.e. 16.9.2015 in response to the notice of hearing non .....

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sessee income @ 50% of gross profit & thereby deleting the various additions made by the A.O. on account of various expenses @ 20% as the assessee did not submit any proof. [3] On the facts and circumstance of the case and in law, the Ld. CIT(A)-I, Surat has erred by allowing depreciation of ₹ 1,49,07,251/- which the A.O. had added for want of any evidences [4] On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. [5] .....

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o brought forward losses details of the same is as under: Loss as per profit and loss account Rs.(-) 46,37,530/- Add: Depreciation Considered separately Rs.1,49,07,251/- Add: Disallowance u/s.40(a)(i) Rs.1,09,94,145/- Total Rs.2,12,63,866/- Less: Depreciation as per Income Tax Rs.62,95,561/- Rules Total Income Rs.1,49,68,305/- Less: Set off of brought forwarded losses of AY : 2005-06 to the extent of current year income Rs.1,49,68,305/- Taxable Income Rs.NIL 5. The ld.AO has passed an ex parte a .....

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1,49,07,251/- 6. Dissatisfied with the determination of the income at ₹ 1,95,08,550/-, the assessee went in appeal before the CIT(A). The ld.CIT(A) has decided the appeal of the assessee by observing as under: 8. The case records were also requisitioned from the Assessing Officer during appellant proceedings. From perusal of the same, it is noticed that there was no compliance by the assessee in response to any of the notices issued by the Assessing Officer. The Assessing Officer's not .....

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re noticed on the credit side of the Profit & Loss Account :- a] Sales /gross receipts ₹ 2,46,12,599 b] Profit on sale of assets ₹ 47,24,925 c] Closing stock ₹ 53,460 On the debit side, the following expenses have been shown :- 1. Opening stock ₹ 53,460/- 2. Power &fuel ₹ 55,31,083/- 3. Rent ₹ 99,03,860/- 4. Repair to machineries ₹ 1,88,595/- 5. Salary and wages ₹ 4,27,771/- 6. Telephone expenses ₹ 1,24,491/- 7. Audit fees ₹ 27, .....

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f total income the profit and gains from Business have been shown at ₹ 1, 49, 68, 305/- against which, brought forward loss of ₹ 1, 49. 68, 305/- has set off showing the returned income at NIL. This means that from the loss of ₹ 46,45,910/- a profit of ₹ 1,49,68,305/- has been arrived at after making some adjustments of admissible / non - admissible items, the details of which are not available. Therefore, the Assessing Officer should have started the computation from  .....

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sing officer has also disallowed 20 % on sundry creditors However, there is no provision for estimated disallowances out of sundry creditors. It is also not known whether these sundry creditors are part of opening balance in which case, no disallowance can be made in the current year or the same are part of current year, in which case, the disallowance can be taken care of by disallowance out of expenses. Therefore, the addition of ₹ 18,41,997/- is deleted. 8.2.1 As discussed supra, the op .....

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599/-. Therefore, the total income of the appellant is taken as 50% on this amount i.e. ₹ 1, 23,06,299/- The assessing officer himself allowed set off of loss / depreciation to the extent of ₹ 87,59, 467/- on the basis of assessment order for Asstt Year 2008-09. Therefore, the total income assessed by the Assessing Officer is reduced to ₹ 35,46,833/-. (Rs 1,23,06,299 - ₹ 87,59,467/-) This ground of appeal is therefore, partly allowed. 9. In ground no. 4 the appellant stat .....

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eciation claim even otherwise is not verifiable. 11. Ground No. 6 11.1 This ground is related to set off brought forward losses for Asstt Year 2005-06 of ₹ 2,23,11,126/- This matter pertains to section 154 of the IT Act and the Assessing Officer may grant set off brought forward loss/ depreciation as permissible under the Act on the basis of records available with the I T Department. 12. In the result appeal is partly allowed. 7. With the assistance of the ld.DR we have gone through the re .....

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