TMI Blog2017 (8) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... ND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Shri SS Rana, CIT DR For The Assessee : None ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is preferred by the Revenue against the order of the ld CIT(A)-XXIV dated 03.03.2014 for the Assessment Year 2008-09. The Revenue has raised effectively following four grounds of appeal wherein additions have been deleted as under:- 1. Deleting the addition of ₹ 72,76,6847- made by the AO on account of unaccounted sales. 2. Deleting the addition of ₹ 17,00,000/- made by the AO on account of capital introduced out of undisclosed sources. 3. Deleting the addition of ₹ 7,68,3547- made by the AO on account of trading expenses. 4. Deleting the addition of ₹ 12,04,8507- made by the AO on account of interest/bank charges. 5. The appellant craves the right to add, alter or demand any ground of appeal 2. The brief facts of the case is that the assessee is a partnership firm who filed its return of income on 30.09.2008 showing Nil income. It is engaged in the business of export of fabrics, readymade garments and job work. The ld AO has gave many o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income by making certain disallowance of expenses and other claims. Further, during the course of assessment the appellant has complied to the notices u/s 142(1) and 143(2) of the Income Tax Act and have furnished the details requisitioned by the Assessing Officer.therefore, it is not a case where the appellant has not complied to the terms of the notices u/s 142(1) and 143(2) of the Income Tax Act, or not furnished any details as requisitioned by the Assessing Officer. Therefore, in my opinion, the Assessing Officer has erred in invoking the provisions of section 144 of the Income Tax Act and in framing the best judgement assessment order. In CIT Vs. Segu Buchiah Setty (77 ITR 639), the Supreme Court has observed that in case of non-compliance of statutory notice, the AO must make a best judgment assessment.The relevant observation is reproduced below:- The clear import of section 23(4) of the Indian Income-tax Act, 1922, is that on the assessee's committing any one of the defaults mentioned therein the Income-tax Officer is bound to make the assessment to the best of his judgment. In other words, if a person fails to make the return required by a notice under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments were received though cheques. Copy of account of Parties (along with amount of sales) were also filed before the A.O. Therefore, in my opinion the appellant had discharged the burden of proof u7s 68 and the AO erred in treating credit sales of ₹ 69,38,1247- as unaccounted sales without questioning the veracity of the evidences filed with him and without bringing on record any material to contradict it. It is further observed that the firm is an old one and in the past also it has been consistently declaring both export and domestic sales of fabric, garments etc. on credit and in cash. As regards the retail cash sales aggregating ₹ 3,28,560, I find that it represents a small fraction of the domestic sales. These sales are fully vouched and ledgerised. I also find that the relevant invoices were available, Copy of ledgers account was also submitted with AO vide letter dt 20.10.2010 which is at Pg 57 of the paper book. It was explained that the appellant sells defective goods in retail as seconds in cash which in my opinion is a normal practice in the business of manufacture and sale of readymade garments. Keeping in view the past history of the case, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een on a vague surmise. In this regard, it is worthwhile to mention that it is not for the tax authorities to put themselves in the shoes of the businessman to decide when and how much capital is required for the purposes of the business of a businessman. It is the sole discretion of the business man/ management to ascertain the amount of capital needed and the AO cannot question it as long as the source of such capital is process and the transaction is legal. Therefore, the addition of ₹ 17 lakhs is hereby directed to be deleted. 5.3 It is further observed that the appellant had submitted the details of expenses such as designing and Sampling charges, dying Printing Finishing charges, Electricity Water Charges, Fabrication expenses, Generator and boiler repair and maintenance expense, Packing Expenses vide letters dated. 03.11.2010, 02.12.12 06.12.12 ( pg 123-135 of PB). The AO has not questioned the veracity or the genuineness of such expenses. He has not pointed out any expense which has not been vouched. The AO has also not given any reason as to why 10% of the claim should be disallowed. On the other hand, the expenditure incurred this year compares well with the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats. It is further explained that other advances are business advances made in ordinary course of business. These are discussed as follows:- i). ₹ 10,21.7807- under the head TDS:- It is explained that TDS was deducted against the job work business carried on by the firm and refund/adjustment was to be made after getting the refund or adjustment of tax on receipt of the income tax orders which were pending. ii). Rishu Textiles debit balance ₹ 14,8Q.293/~:- During the year the appellant purchased goods worth ₹ 24,643/- and also paid for designing /sampling ₹ 2,013/-(Pages 97 of the Paper Book). It is noted that the firm was having opening credit balance of 5.93.050/- However the amount paid in the month of January 2008 is ₹ 15,00,0007- as advance against the purchase order which couldn't get materialized. iii). B. Deepa ₹ 1,47.376/-:- The amount paid as rent security for premises situated at Bangalore. The firm was having a factory at Bangalore, this amount recovered in the next year when the factory was closed. iv). Kanishq Fab ₹ 2.77.386/-:- Advance was given for supply of fabric. On default by the party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the addition vide para No. 5 of the order with the above including rejection of books of account were held by him against the ld AO and deleted the addition without even calling for remand report from the AO as well as giving an opportunity of hearing to the ld AO. It is also not known from the order of the ld AO that before holding that the ld CIT(A) not justifying in making assessment u/s 144 of the Act requisite details of the assessment was called for or verified or not. When the summons were issued to the partnership u/s 133 of the Act and they did not appear before the ld AO as per para NO. 4 of the order of the ld CIT(A), how the ld CIT(A) has reached to a particular decision without examining the partners of the assessee and deleting the additions. In view of the above facts and on reading of the order of the ld CIT(A) it is apparent that he has merely believe the version of the assessee without even confronting the AO or calling for remand report. It is also the claim of the assessee that not proper opportunity was given to the AO therefore, in the interest of justice we set aside the issue back to the file of the AO to make the assessment de novo after carrying ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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