TMI Blog2016 (3) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted the P & L account statement and on the other hand, he has rejected the books of accounts of the assessee. So, we are of the considered view that Ld. CIT(A) has erred in quashing the action taken by the Assessing Officer to invoke provisions contained u/s 145(2) of the Act without taking into account the admitted fact that the Assessing Officer has not provided sufficient opportunity of being heard to the assessee rather rejected the books of accounts arbitrarily and declared the bills filed by the assessee as bogus unilaterally. So, the impugned order passed by Ld. CIT(A) is not sustainable in the eyes of law and without entering into the merits of the case, the file is ordered to be restored to the Assessing Officer to decide afr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed print out on the ground of being voluminous work. The assessee company later on produced the books of accounts in soft form on laptop but still neither the bank statements were produced nor any bills and vouchers produced in original. Thus, the assessee failed to discharge its onus to prove various expenses claimed by it. Photocopies of some of the bills of major expenses exceeding ₹ 50,00,000/- filed by the assessee found to be not paid during the Assessment Year under consideration as the same were not bearing stamp nor do they bear cheque number and date and as such, Assessing Officer came to the conclusion that since such bills are for payment of more than ₹ 20,000/- each, which might have been paid in cash, the same can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stricting the disallowance from ₹ 1,22,956/- to ₹ 73,850/- u/s 14A. 7. However, on the other hand, Ld. A.R. repelled the arguments addressed by the Ld. D.R. by contending inter alia that the assessee has produced all the relevant bills vide letter dated 16.09.2010, which have been arbitrarily rejected by the Assessing Officer; that since the payment was made in advance so, cheque numbers were not mentioned in the bills; that entire details of bills of sundry account has been mentioned in the P L account; that kachha bills have been prepared at the site and original bill is lying at page 94 of the Paper Book. 8. Now, the first question arises for determination in this case is, as to whether Ld. CIT(A) has erred in law an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s estimated at 8%. 9. Now, adverting to the impugned order, Ld. CIT(A) has made the following observations on the rejection of books of accounts, relied upon by the Assessing Officer: In this case the AO has made allegations far in excess of the discrepancies noted. He has stated that the books of account were not reliable and many disturbances were noted in the expenses and such expenses have become disallowable. The AO states that these expenses represent the tip of the ice berg. The AO has only given instances of a few vouchers which had some defects. Beyond this the AO has not been able to establish that there were irregularities in the accounts which could lead to conclude that the books of accounts were unreliable and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of which profits and gains of its business have been deducted. The AO has not given sufficient reason to suggest that the accounts of the appellant were such that correct profits could not be deducted from the accounts. The AO has not given an opportunity to the appellant before invoking section 145. This is an essential prerequisite of any proceeding that the AO cannot draw an adverse inference against the appellant without giving an opportunity and a fair and just chance to the appellant to give its submissions. Principles of natural justice should have been followed. I therefore hold that the action of the AO to invoke 145(2) is not correct and is therefore quashed. The returned income of the appellant may be accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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