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2018 (3) TMI 523

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..... . Similarly, in case, the assessment is completed u/s 143(3) by rejecting the books of accounts and estimating the income as held in the case of Indwell Constructions Ltd. (1998 (3) TMI 121 - ANDHRA PRADESH High Court), no other disallowance is required to be made. The view of the CIT that the AO has not considered the disallowance u/s 40(a)(ia) is also a difference of opinion and does not give any possibility for invoking the jurisdiction u/s 263. Hence, we set aside the orders of the Ld.CIT passed u/s 263 and allow the appeals of the assessee. - I.T.A.No.298-299/Viz/2012, I.T.A.No.505-508/Viz/2016 - - - Dated:- 9-3-2018 - Shri V. Durga Rao, Judicial Member And Shri D. S. Sunder Singh, Accountant Member Appellant by : Shri G.V.N .....

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..... O) has issued notice u/s 142(1) for not filing the return of income in response to which the assessee filed the return of income admitting total income of ` 5,48,450/-. The case was taken up for scrutiny. During the assessment proceedings, the assessee submitted that it has not maintained the books of accounts and only available material was daily sheets, loose slips regarding business transactions which were impounded at the time of survey. As per the working sheets, the total sales were computed by the AO at ₹ 2,49,65,610/- for the assessment year 2007-08 and ₹ 3,02,72,650/- for the assessment year 2008-09. Since the assessee was not maintaining the books of accounts, the AO completed the assessment estimating the income @15% .....

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..... paper book for the assessment year 2008-09 and the daily sheets that were found at the time of survey were the source for initiation of revision proceedings u/s 263 of I.T. Act. According to the Ld.CIT, the department has computed the net profit on the basis of the evidences found during the survey proceedings considering the total income and expenditure, hence, the AO should have adopted the same income. Since there was no indication of payment salaries to the partners and interest on partnership capital, the AO should not have allowed the interest on capital and remuneration paid to the partners. Similarly, the Ld.CIT also observed that the assessee violated the provisions of TDS in respect of payments made for machine hire charges, there .....

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..... e of income and expenditure. It was incomplete in respect of the expenses incurred for salaries, wages, interest, marketing expenditure etc. Therefore argued that the page No.28 of the paper book which shows the income and expenditure details for the assessment year 2007-08 and page No.6 of the paper book for the assessment year 2008-09 shows rough workings but not complete income and account expenditure, hence argued that the same cannot be taken cognizance of. This rough working was prepared by the revenue authorities without preparing the books of accounts, profit and loss account, balance sheet and the schedules for Depreciation etc.., hence unreliable. The Ld. A.R further submitted that the revenue officials were not sure of it s corre .....

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..... penditure, however on careful verification of both the working sheets reveal that the complete expenditure was not taken into account by the A.O. While completing the assessment, the AO has estimated the income @15% of the total sales by rejecting the books of accounts, since the complete information was not available. The AO allowed the interest on capital and the remuneration paid to the partners from the estimated income. The Ld.CIT viewed that since no evidence was available at the time of survey for payment of remuneration and interest on capital in the loose slips the AO has committed an error in allowing interest and remuneration. As per the provisions of I.T. Act, the interest and remuneration is required to be allowed as evidenced .....

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..... 009. The Ld. CIT has taken up the case for revision u/s 263 and set aside the orders passed u/s 143(3). The assessee filed appeals before CIT(A) and the assessee also filed appeal against the order u/s 263 before ITAT. The Hon ble ITAT dismissed the appeals of the assessee against the orders u/s 263 for non prosecution. Hence, the Ld. CIT(A) dismissed the appeals holding that order u/s 263 has became final. Subsequently, the assessee filed miscellaneous applications before the Tribunal and the ITAT recalled the appeals filed against the order u/s 263. By this order we have set aside the orders of the Ld.CIT passed u/s 263 and allowed the appeals of the assessee. Hence, these appeals gets new life for fresh adjudication before the CIT(A). He .....

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