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TMI Blog2023 (6) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions: (i) The order dated 23-3-2020 is restored and in continuation of the subsequent orders dated 8-3-2021, 27-4-2021 and 23-9- 2021, it is directed that the period from 15-3-2020 till 28-2- 2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. (ii) Consequently, the balance period of limitation remaining as on 3-10-2021, if any, shall become available with effect from 1- 3-2022. iii. In cases where the limitation would have expired during the period between 15-3-2020 till 28-2- 2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 1-3-2022. In the event the actual balance period of limitation remaining, with effect from 1-3-2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15-3-2020 till 28- 2-2022 shall also stand excluded in computing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the present appeal. 5. The Ld. DR has submitted that the assessee neither attended assessment proceedings nor produced books of account or any documentary evidence with respect to claim of loss in the return of income and therefore, the AO rejected the books of account by invoking provision of section 145(3) of the Act and framed the assessment as on the basis of best judgement. 6. The AO has passed assessment order u/s 144 of the Act when there was no response or compliance on the part of the assessee to the notices issued by the AO u/s 142(1) as well as summons u/s 131 of the Act issued by the AO. The AO given sufficient opportunity to the assessee to present the case and file the supporting evidence however, the assessee failed to produce the supporting evidence and requisite details. Accordingly, the assessment was framed by the AO u/s 144 on the basis of the information available with the AO. He has further submitted that the assessee filed the additional evidence before the Ld. CIT(A) but the same was not allowed to be verified and examined by the AO in the remand proceedings as the Ld. CIT(A) did not allow the sufficient time to the AO. The Assessing Officer request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of depreciation has been filed by the assessee. The assessee produced books of account during the remand proceedings but the AO again made the remarks that ledger was not supported with complete bills and hence, reiterated the rejection of books of account. The AR has submitted that the assessee produced books of account along with bills and vouchers during the remand proceeding and also replied point wise details with each of the disallowance made by the AO while passing the assessment order and explained that a sum of Rs. 13,87,504/- relates to advance against sales. The detailed chart containing name and addresses of the parties with ledger account and confirmation were filed. A sum of Rs. 37,05,000/- related to unsecured loan taken during the year and assessee has produced the detailed chart with PAN, Address and confirmation of the parties. A sum of Rs. 3,79,83,403/- related to the sundry creditors and assessee produced all the details explaining the nature, name, addresses, phone no. of the parties along with ledger account. The assessee also explained the amount of Rs. 63,04,100/- on account of alleged cash deposit in the bank account is actually a transaction pertains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account and other evidence in the first remand proceedings and raised certain queries to avoid the same, therefore, the Ld. CIT(A) again called for remand report which was also avoided by the AO on the excuse of busyness. Thus, the Ld. AR has submitted that the ld. CIT(A) has rightly considered the evidence produced by the assessee and deleted the addition though part addition has been confirmed by the Ld. CIT(A). He has supported the impinged order of the Ld. CIT(A) and submitted that the assessee has produced an affidavit of CA, Mahendra Kumar Jain who attended office of the AO during the assessment proceeding but the AO refused to entertain him as well as to take the reply to notice u/s 142(1) of the Act on record for want of power of attorney. In the affidavit CA, Mahendra Kumar Jain has explained all the facts and his bitter experience during the assessment proceedings. He has also filed a copy of the submission given to the AO on 19.02.2015 along with Annexure which were not considered by the AO while passing the assessment order. Thus, the Ld. AR has submitted that there is no infirmity in the impugned order of the Ld. CIT(A) and the same may be upheld. 10. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussed in para 8) 45,00,000/- Total assess Income 5,38,80,006/- 11. The AO rejected the claim of loss only on the ground that nobody has responded to the notice issued however, the return of income as well as audit report was very much available with the AO as recorded in the assessment order. Therefore, without pointing out the defect in the claim of loss the AO has simply rejected the same and taken the business income at nil. It is pertinent to note that the assessee has specifically made the statement that the representative of the assessee attended the office of the AO and submitted reply to the notice u/s 142(1) dated 19.02.2015 but the same was not taken on record by the AO for want of power of attorney. The assessee further stated that the Ld. AR has tried repeatedly to submit power of attorney on the next day and day after but the AO avoided to take power of attorney on record and therefore, it was highhanded treatment given by the AO to the assessee and its representative. In support of these facts and submission the assessee has filed the affidavit of one Mr. M.K. Jain, CA who has made solemn statement in the affidavit as under: 12. During the course of appellate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) in para 8 of the impugned order as under: "8. The AO in his remand report narrated as under:- "Now your good self directed to verify the loss by examination of the books of accounts as the assessee has produced the books of accounts. there is no annexure enclosed with the letter as referred above. Therefore in absence of Tax Audit Report and books in accounts verification of loss claimed by assessee is not possible" He further disbelieved the contention of the assessee that Rs. 13,92,820/-and Rs. 1,80,500/- have already been disallowed and added back in the computation of income though a detailed list in this regard was also submitted before him. 14. The only objection raised by the AO is non-filing of the tax audit report. The AO avoided the examination of books of account and other supporting evidence for want of tax audit report though the statutory audit report was already filed before the AO during the assessment proceedings. Considering the conduct of the AO for not conducting the remand proceeding and examination of the books of account the Ld. CIT(A) observed in para 9 of the impugned order as under: "9. The case was again fixed before my predecessor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither satisfactory nor convincing and reasonable to finalise the appeal proceedings. It needs to be noted by the Assessing Officer that the CIT (A) has no power to set aside the assessment order for re-examination and reconsideration. Therefore, the then CIT(A) has remanded the entire case for re-examination in view of the fact that the assessment was completed us 144 of 1.T. Act. resulting into heavy additions and disallowance of loss of more than 13 crores without bringing out any material on record. These kinds of high pitched assessments are not appreciated by the organization if not supported by the reasonable and sufficient material." 15. It is specifically noted that the remedy for non-filing of tax audit report is to initiate separate proceedings under Income Tax Act but when all other documents and books of account are maintained and statutory audit report were filed to show that books of account have been audited by the auditor then the AO ought to have examined books of account and supporting evidence. On-going through the assessment order we find that the AO has rejected the books of account for want of tax audit report which is not a good ground without pointing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remand report: Though the AQ has rejected the books again in remand report but in a general manner. NO specific major defect was pointed out. The AO seems to be satisfied with the books of account and supporting vouchers bills & documents .Further no specific adverse comment was made in the remand report Further the disallowances made in the order u's 144 were also not discussed in the remand report. It seems that the AO had nothing to say on these issues. 12.3 My predecessor also while directing the AO to submit remand report has come very heavily on the AO, It seems that the AO had not even tried to address the core issue ie why the loss was disallowed and when all the documents and books of account are produced, why the kept silent on the additions made u/s 144 inspite of given several opportunities. 12.4 In view of the above facts and the judicial decisions so discussed in para 11 The non allowance of loss of Rs. 13,43,58,600/- seems unjustified and the same is directed to be allowed. As a result this ground of appeal is allowed Ground No.2 13.0 This ground relate to various additions of Rs. 5,38,80,006/ - made in the absence of documentary evidence. 13.1 The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of books of account and bills and vouchers. Accordingly, audited books of account with supporting documents were produced before the Act. The disallowances made were also addressed specifically. The AO verified the books of account and supporting and pointed out some proposed disallowance in the case. Merely because some disallowances were were proposed books of account cannot be rejected u/s 145. 14.2 The AO seems to have carried away with the order passed u/s 144 though audited books of account and supporting were thoroughly examined yet the ground of rejection of books of account was maintained. The reason was also not explained by the AO as to why he is again resorting to section 145 at the cost of repetition, the case laws cited by the AR are reproduced below. (i) Hon'ble High Court of Madhya Pradeshi in the case of Shri Suresh Chand Talera vs. CIT reported in 73 CCH 1034 MPIC held as under:- "Sec. 145 would be attracted only to a case where either the accounts are r correct or complete to the satisfaction of AO or the method employed is such that in the opinion of the AC the income of the assesse could not be properly deduced from such accounts maintained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Jharkhand High Court which, in the case of CIT vs. Anand Kumar Modi (2014) 44 taxmann.com 21 (Jharkhand) held that addition made after rejecting books maintained by assessee should be deleted when all quantitative details were available in hooks of account and account and accounts were regularly maintained. (iv) The judgment of Hon'ble Madras High Court in the case of GNDI vs. DCIT (2014) 43 taxmann.com 246 is extremely pertinent gone lies of the case. In this case, it was held that when assessee explained reasons for fall in G.P and revenue did not verify same by substantial materials impugned order of the AO was to be set-aside. (v) The judgement by the Hon'ble High Court in the ease of CIT Faridabad vs. Smt. Sulochana Bhatia (2012) 20 taxmann.com 298 (P & H ) needs to be mentioned here. In this case, the A.O. taking a view that assessee had not maintained books of account properly, rejected the same and made certain additions on account of suppression of receipts. On appeal Commissioner (Appeals) as well as the Hon'ble Tribunal deleted the said addition. On revenue's appeal. it was noted that assessee my produced recipes and the AD had adopted method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though the section provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard to the available material, (xi) In the case of CIT vs. Om Oversens reported in 13 Laxman 185 Punjab and Haryana High Court held that the AO can't reject the book of accounts provided by the assessee without specifying proper adequate and sufficient reasons. The Hon'ble High Court held that "We find no force in the arguments raised by the learned counsel for the revenue. While allowing the appeal of the assessee, the CIT(A) has given a finding of fact that the additions have been made by the AO without pointing out any specific defect in the books of account The sad finding has been further upheld by the Tribunal. During the course of arguments, learned counsel was unable to point out any illegality or perverse in the said finding of fact. Thus, we find no infirmity in the order of the Tribunal. (xii) In the case of CIT vs. Vikram Plastics reported in 239 ITR 161 Hon'ble Gujarat High Court held that "it was found there was no discrepancy or defects in books of account maintained by assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be something more than a mere suspicion to support the assessment" (xiv) Hon'ble High Court of Madhya Pradesh in the case of CIT vs. Saatal Kattha & Chemicals (P) Itd reported in 73 CCH 0872 MPHC held as Under:- "Accounts Rejection G.P. rate vis-a-vis undisclosed sales Assessee engaged in the business of manufacture and sale of Kattha and Cutch by processing Kher wood AO rejected the books maintained by the assessee by invoking s 145(2) on the ground that the assessee did not maintain quantitative records of Kher wood trees, and determined the sale of Kattha outside books by estimating yield at 14.13 per cent Not justified." (v) The Hon'ble Supreme Court in the case of CIT vs. Padamchand Ramgopal reported in 76 ITR 719 held that insignificant mistakes noticed in the books of account of one year, like one item of receipt having en incorrectly recorded, cannot form the basis for rejection of books of account. 14.3 The existence of books of account and relevant documents have not been disputed by the AO. When complete books of accounts are maintained and statutory audit of the same is carried out by a qualified Chartered Accountant, there seems to be no reason for re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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