TMI Blog2023 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... s, which is not permissible under the law. CIT(A) has erred in confirming the order of the AO and arriving at a conclusion that if some vouchers / evidence pertaining to the claim of the assessee are not satisfactorily established before the AO, the AO is not empowered to estimate the profits of the assessee without rejecting the books of accounts. AO ignoring the established provision u/s 145(3), estimated the profit without rejecting the books. Decided in favour of assessee. - I.T.A.No.4/Viz/2023 to 7/Viz/2023 - - - Dated:- 29-3-2023 - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Appellant : Shri M.V.Prasad, AR For the Respondent : Shri O.N.Hari Prasada Rao, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owned up the impounded diaries, vouchers, loose sheets, promissory notes and the pen-drive as belonging to the firm and to him. After considering the information filed by the assessee firm and based on the impounded material found during the course of survey operations, the Assessing Officer (AO) made the following additions : 1. Unexplained cash credits : Rs.85,16,495/- 2. Estimation of income @8% on main contracts and 4% on sub contracts : Rs.66,31,375/- 3. Aggrieved by the additions made by the AO, the assessee firm preferred appeal before the CIT(A). The Ld.CIT(A), after considering the submissions made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd non production of vouchers amounts to considering the already decided issue which amounts to change of opinion. Therefore, the CIT(A) ought to have deleted the addition made again by estimating the profit. 6. The appellant may add, alter, modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal. It was the submission of the Ld.AR that the Ld.AO has estimated the business profits at Rs.66,31,375/- without rejecting the books of accounts u/s 145(3). Once the AO accepts the books of accounts, the AO is precluded to estimate the profits, but he is entitled to disallow some expenditure, if he is not satisfied with the claim of the assessee. He further contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in support of it s claim and confirmed the addition made by the AO, since the assessee could not substantiate it s claim even during the appellate proceedings. 4. Per contra, the Ld.DR submitted that it is a mistake committed by the AO by oversight. He has not rejected the books and estimated the profit. He relied on the detailed order passed by the Ld.CIT(A) and pleaded to confirm the order passed by the Ld.CIT(A). 5. We have heard both the parties and perused the material available on record. It is an admitted fact that the AO has estimated the profit of the assessee u/s 145(3), without rejecting the books of accounts. No doubt, all the decisions, which were relied by the Ld.AR cited above clearly held that the AO has no pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly without rejecting the books, estimated the profit @8% on main contracts and 4% on sub contracts, which is not permissible under the law. The same view has been taken up by various High Courts and Tribunals in the decisions cited as under : (i) Hon ble High Court of Madras in the case of Principal Commissioner of Income Tax, Chennai Vs. Marg Ltd. [2017] 84 taxmann.com 52 (Madras) held that The Tribunal has expressed its considered opinion that only when an assessee is not maintain books of account properly and the correct income cannot be estimated on the basis of the books of account, then only the books of account can be rejected. The Tribunal has gone on to hold that the Assessing Officer can estimate profit only thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness same would form the basis for computation of income. In the instant case, it is noticed that neither the Assessing Officer nor the Commissioner (Appeals) have rejected the books of account maintained by the assessee in the course of the business. As such Tribunal has rightly rejected or set aside the partial addition made by the Assessing Officer for arriving at gross profit and sustained by the Commissioner (Appeals) and rightly held that entire addition made by the Assessing Officer was liable to the deleted. The said finding is based on sound appreciation of facts and it does not give rise for framing substantial question of law. (iii) Hon ble High Court of Calcutta in the case of Swadeshi Commercial Co.Ltd. Vs. Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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