TMI Blog2022 (5) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... , we see no reason to interfere in the order of the Ld. CIT(A) deleting the addition made on account of unsecured loans u/s. 68 of the Act - Decided in favour of assessee. Disallowance of depreciation on newly acquired assets - CIT-A deleted the addition - HELD THAT:- Disallowance of depreciation was made since no details were available with the A.O. vis- -vis the purchase of new assets. CIT(A) noted from the records of the assessee as well as the Tax Audit Report filed, that the assets were duly accounted for in the books of the assessee. Further the bills of the assets purchased were forwarded to the A.O. for verification, and no adverse comments were made by him on the same. We note that it was only contemporary data/evidence which was furnished by the assessee, verified by the A.O. and no infirmity found in the same. CIT(A) was justified in admitting the evidences and deleting the disallowance of depreciation. Unexplained investment u/s. 69 - addition related to the bank balance reflected in the return of income filed by the assessee on account of the same remaining unreconciled with the ban - CIT-A deleted the addition - HELD THAT:- CIT(A) deleted the addition on fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he GP rate for estimating the profits. He also noted that the Books of the assessee were duly audited. Accordingly he held the act of the AO of rejecting the Books of the assessee and estimating the Gross Profit to be entirely baseless and thus unjustified. Before us Ld.DR was unable to point out any infirmity in the above findings of the Ld.CIT(A) . - ITA No. 1901/Ahd/2014 And C.O. No. 247/Ahd/2014 - - - Dated:- 6-5-2022 - Shri Annapurna Gupta, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Rameshkumar L. Sadhu, Sr. D.R. For the Respondent : Shri Vijay Ranjan, A.R. ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal by the Revenue and Cross Objection by the Assessee have been filed against the order passed by the Commissioner of Income Tax (Appeals)- VIII, Ahmedabad, (in short referred to as CIT(A)), dated 07-03-2014, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2009-10. 2. As transpires from the order of the authorities below, assessment in the impugned case was framed ex-parte u/s. 144 of the Act, on account of non-compliance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in admitting additional evidence and in deleting the addition of Rs. 58,64,847/- made u/s.69 of the Act, without properly appreciating the fact that ample opportunities given to the assessee to produce necessary evidence have not been availed/complied by the assessee forcing the AO to resort to passing ex-parte order u/s.144 of the Act. 4. The Ld.CIT(A) has erred in law and on facts in admitting additional evidence and in deleting the addition of Rs. 42,05,417/- made on account of unexplained credit u/s.68 of the Act, without properly appreciating the fact that ample opportunities given to the assessee to produce necessary evidence have not been availed/complied by the assessee forcing the AO to resort to passing ex-parte order u/s.144 of the Act. 5. The Ld.CIT(A) has erred in law and on facts in admitting additional evidence and in deleting the addition of Rs. 70,38,632/- made on account of disallowance of expense, without properly appreciating the fact that ample opportunities given to the assessee to produce necessary evidence have not been availed/complied by the assessee forcing the AO to resort to passing ex-parte order u/s.144 of the Act. 6. The Ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have gone through the order of the Ld. CIT(A) and we find that before the Ld. CIT(A), the assessee had filed submissions in writing vide his application dated 10.04.2012 which was forwarded to the A.O. for his comments. The remand report of the A.O. dated 31.12.2013 was in turn forwarded to the assessee for his comments thereon which was duly submitted ,as reproduced at page 4 to 10 of the CIT(A) s order. After considering all of the above, Ld. CIT(A) admitted the additional evidences filed by the assessee stating that they were contemporary in nature and noting that the assessee was unable to produce them as he was facing difficulty due to the circumstances. The relevant findings of the Ld. CIT(A) at page 10 of the order is as under: I have carefully considered the details filed by the appellant, the report of the A. O. and the counter comments filed by the appellant. Certain evidences were not produced by the appellant before the A.O. Further, the evidence now being submitted are contemporary in nature and relates to the entries in books of accounts. The evidence must have been available with the appellant but he could not produce as he was facing difficulty due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted before the A.O. for his consideration. It was specifically brought to the notice of the A.O. that there was no notice u/s. 143(2) for the A. Yr. 2009-10 and therefore the A.O. could not have assumed valid jurisdiction to issue any notices u/s. 142(1) for the A. Yr. 2009-10 in this case. The appellant company, being under a bona fide belief that no notice u/s 143(2) was issued by the Assessing Officer for A. Yr. 2009- 10, within the prescribed time limit and therefore, no legal jurisdiction to scrutinize the case for the assessment year 2009-10 could be assumed by the Assessing Officer. 3. After discussing the correspondence between the appellant company and the Assessing Officer, from paragraph No. 12 onwards of the assessment order, the A.O. has discussed the contents of the show cause notices/letters issued by him before passing the Ex-parte Assessment Order u/s 144 of the Act in this case for the Assessment Year 2009-10 and computed the total income of the Appellant Company at Rs. 5,22,79,410/- in place of returned income of Rs. 20,94,480A- on the basis of the Audited Accounts of the Company. The A. O. has made following additions to the returned income: 9. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant findings of the Ld. CIT(A) at para 5.3 of his order is as under: 5.3 Decision: I have carefully considered the facts of the case, the assessment order-and the written submission of the appellant. The AO has made the addition of unsecured loans appearing in the balance sheet. The appellant has explained, during the course of appellate proceedings that the loans have been taken from the directors of the company who are assessed to tax and are regularly filing the return of income. The loans have been taken from three directors. The loans in respect of two directors are old and only interest has been credited in that account. There is some addition in the other account namely from Mr Bhavesh G Patel. Shri Bhavesh is regularly assessed to tax and is filing return of income. It is also noted that no addition was in respect of loan taken from him in earlier years. The appellant has also filed his confirmation regarding the deposit. It is noted from the remand report that he has verified the information on test check basis. Notices under section 133 (6) was issued and the confirmations were received. In view of these facts and circumstances the appellant has duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book has also been forwarded to the AO for verification and it is noted that there is no adverse comment on this evidence. In view of these facts and circumstances, the addition made by the AO in respect of depreciation of newly created assets is directed to be deleted. The ground of appeal is accordingly, allowed. 16. We have noted from the above that the disallowance of depreciation was made since no details were available with the A.O. vis- -vis the purchase of new assets. The Ld. CIT(A)noted from the records of the assessee as well as the Tax Audit Report filed, that the assets were duly accounted for in the books of the assessee. Further the bills of the assets purchased were forwarded to the A.O. for verification, and no adverse comments were made by him on the same. We note that it was only contemporary data/evidence which was furnished by the assessee, verified by the A.O. and no infirmity found in the same. 17. In view of the above therefore, we hold, the Ld. CIT(A) was justified in admitting the evidences and deleting the disallowance of depreciation amounting to Rs. 6,62,355/-. 17.1Ground of appeal No.2 is dismissed. 18. In ground no. 3, the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The assets are duly reflected in the books of account and are carried forward in from earlier years. The addition made by the AO is therefore directed to be deleted. The ground of appeal is accordingly allowed. 21. We have noted that the Ld. CIT(A) deleted the addition on finding that these balances were duly reflected in the books of account of the assessee and were majorly carried forward from the earlier years. We find that it was only contemporary evidence which was appreciated by the ld. CIT(A) for the purposes of holding that the entire bank balance was explained as appearing in the books of accounts of the assessee. Even the A.O. did not make any adverse comment with regard to the same in his remand report. The Ld. CIT(A) we hold was therefore wholly justified in deleting the addition made u/s 69 amounting to Rs. 58,64,847/- . Ground of appeal No.3 is dismissed. 22. In ground no. 4, the revenue has challenged the deletion of addition made on account of unexplained credit amounting to Rs. 42,05,417/-. The Assessing Officer, we find, made the addition in relation to the sundry creditors reflected in the return of income ,for failure of the assessee to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis and reason of disallowance or addition should be made by the AO by estimating the sundry creditors. It appears that the AO was acting with a biased mind. Subsequently, the present AO, his remand proceedings, has made sample verification of the details given by the appellant and no adverse comment has been given in the remand report. Further, the books of accounts of the appellant company were audited and the auditors have not given any remark about the sundry creditors in the, balance sheet. In view of these facts and the submission of the appellant the disallowance made by the AO are directed to be deleted. The ground of appeal is accordingly, allowed. 24. As is evident from the above, the ld. CIT(A) found the entire balance as pertaining to sundry creditors against which there were corresponding L/C s also all duly reflected in the audited books of accounts of the assessee and further found there was no basis with the A.O. for making the impugned addition which was merely done on estimate basis. He also noted that in remand proceedings, the A.O. had made sample verification of the details given by the assessee and found them to be correct. Considering the aforesaid f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. It has also given a comparison chart showing the expenses in various heads of last four years. It has been submitted that there is no abnormal increase in the expenditure and the same should therefore, be allowed fully. The information given by the appellant were also sent to the AO for verification and it is noted that the AO has commented that he has verified the information on sample basis. Further it is also noted that the appellant's case has been completed in the scrutiny in several others years and there has been no disallowance on this basis except that in assessment year 2007 - 08 where a disallowance of Rs. 20,000/- on lump-sum basis was made. I have carefully considered the information available on record, the submission of the appellant as well as the report of the AO in remand proceedings. It is noted that the books of accounts of the appellant company are audited and there is no abnormal increase in the expenditure shown by the appellant as compared to earlier years. The expenses in this year are at Rs. 4.69 crores as against the turnover of 50.58 crores. The expenditure in earlier year that is 2008 - 09 was at 5.58 crores as against the turnover of 92.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported by any evidence, or comparative case and particularly when the assesses has never shown 12 % G.P. since its inception. As such the estimation of G.P. has no force of all and thus this addition deserves to be deleted. c) It is also not proved that the G.P. is low. d) The items manufactured by the assessee in subject to excise duty and day to day production as well as sales records are maintained as per excise rules. It would be seen from the assessment order that the Ld. A.O. has made various additions to the returned income and computed the total income of the appellant company at an exorbitant figure of more than 5 crores, by making various additions to the returned income by way of disallowances and estimated G.P. addition, without discussing the results shown by the appellant company in past years. He has neither quoted any comparable case for this purpose nor considered the extent of expenditure claimed in the preceding years. The estimate of G.P. @ 12% appears to be imaginary, so also the reasons given by him for making various disallowances and additions this year without any basis. The assessment has been framed at such a huge figure, which appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the context of the above decisions of the Courts, it may be submitted that the assessment be annulled/cancelled as well as the appeal may kindly be decided on merits also and the additions made be deleted. 34. The Ld. CIT(A) deleted the GP addition holding as under: 10.3 Decision: I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. The assessing officer has made an addition by estimating the GP of the appellant company as the gross profit shown by the appellant company was 6.7% of the total turnover. The AO gave a show cause to estimate the gross profit at 12% by estimating the turnover at Rs. 60 crores. The appellant did not give reply during the course of assessment proceedings and accordingly the AO estimated the GP by increasing the turnover to 60 crores and applying the rate of 10%. During the course of appellate proceedings the appellant explained that the GP was normal and there is no reason of estimation of GP. It has been submitted by the appellant that no comparable case has been mentioned by the AO and the estimation of turnover was also arbitrary. The comments given by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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