TMI Blog2020 (9) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In this case, the AO without rejecting the books of account as required u/s. 145(3) has resorted to estimate the income by ad-hoc disallowance of expenditure claimed by the assessee and according to us if the AO is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) of section 145 has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2) of section 145 then the AO may make an assessment in the manner provided in section 144, which allows the AO to make Best Judgment Assessment. This is not what the AO did. Thus, the AO has not followed the procedure pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eproduced the reply of assessee as under:- all the payments are made although by cash but are supported by proper vouchers and the quantity handled as per register maintained for the purpose. No disallowance was ever made in the past and whatever evidence of payment could be kept, we have tried our best to maintain it. In these village areas, we cannot get any establishment contractor and as such we have to employ local people to perform this work otherwise the local unions will not allow us to work. They are more vigilant than any other government department to look after the interest of the poor workers . 5. After noting the assessee s reply supra, the AO did not accept the contention of assessee for the following reasons:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside to Drying Shed as some potatoes, which are wet had to be dried up before these are stored on the storage racks. Every year, the payments are made to collies on the basis of quantity handled and the rates are almost fixed in all the nearby Cold Storages in the locality. We also note that all the payments have been made on different dates to the workers for loading / unloading shifting of potatoes. We note that the AO did not accept the evidence produced by the assessee for the following three reasons:- (a) Party-wise details of collie and cartage not provided. (b) Non-disallowance in earlier years is no ground. (c) Local Union Rules does not prove that no extra expenditure is booked. 8. We note that sample bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Act ) has resorted to estimate the income by ad-hoc disallowance of expenditure claimed by the assessee and according to us if the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) of section 145 of the Act has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2) of section 145 of the Act, then the Assessing Officer may make an assessment in the manner provided in section 144, which allows the AO to make Best Judgment Assessment. However, this is not what the AO did. Thus, the AO has not followed the procedure prescribed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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