9911796707
TMI Blog2024 (8) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 months and without any cogent reasons / evidence to justify earlier statement during survey was given under coercion or mistaken belief of facts or law? 2. Whether on facts and in the circumstances of the case and n law, the CIT(A) is justified in deleting the addition of Rs. 1,70,05,341/-, ignoring that: (i) The retraction of the assessee was merely an afterthought, filed after delay of more than 23 months and without any cogent reasons and evidence to justify that earlier statement during survey given under coercion or mistaken belief of facts or law? (ii) Even, in the affidavit of retraction for this specific AY 2015-16, which is quoted in the assessment: order, the assessee expressed his inability to explain the contents of the impounded documents with reference to books of accounts? (iii) Despite the admitted inability of the assessee to explain the contents of the impounded documents, Ld. CIT(A) deleted the addition even when Jansampark Advertising & Marketing (P.) Ltd. [2015] 56 taxmann.com 286 (Delhi) has held that though it is obligation of Assessing Officer to conduct proper scrutiny of material, in event of Assessing Officer failing to discharge his functions p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments - not only from the impounded documents but also from the statement dated 01.02.2016 of partner of assessee firm Shri Sanjay Agrawal? (e) Hard copies of books of account not being available at the premise and one employee Shri Rajesh Bhansali running away with books containing tally data in pen drive - as admitted in statement dated 27.01.2016 by Shri Rajesh Bhansali himself? (f) Assessee maintaining different audit reports for Income Tax Department and for availing loan - as evidenced from statement dated 01.02.2016 of (g) At least 22 stamp/rubber seals related to various entities were also found during the survey from assessee premises as evidenced from statement dated 28.01.2016 of Shri Amit Agrawal? 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in concluding that there was no reason for the AO to reject the books of account, ignoring the above facts in ground 4, when even in the affidavit of retraction for this specific AY 2015-16, which is quoted in the assessment order, the assessee has clearly expressed his inability to explain the contents thereof with reference to books of accounts in the wake of impounded material? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any further beyond those available on record, therefore, we have no hesitation in admitting the same. The aforesaid view that where an additional ground of appeal involving purely a question of law requiring no further verification of facts is raised before the Tribunal, though for the first time, then, the same merits admission is supported by the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 4. Succinctly stated, the assessee firm which is engaged in the business of civil construction was visited with survey proceedings u/s. 133A of the Act on 28.01.2016. During the course of survey proceedings, various loose papers/documents were impounded. 5. As is discernible from the record, Shri Sanjay Agrawal, a partner of M/s. Sanjay Agrawal, i.e. the assessee firm, in his statement recorded u/s. 131 of the Act on 01.02.2016 after, inter alia, considering the discrepancies in his books of account had agreed to disclose its net profit for A.Y. 2015-16 and A.Y.2016-17 @ 8% of its gross receipts. Thereafter, the assessee firm had e-filed its return of income for A.Y.2015-16 on 29.03.2016, declaring an income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 4,23,99,241/-. 7. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). The assessee had come forth with the following multi-facet contentions before the CIT(Appeals) :- (I) that the A.O without pointing out specific defect had wrongly rejected the duly audited books of account of the assessee firm u/s.145(3) of the Act; (II) that the A.O had wrongly construed the assessee's offer to disclose its net profit @8% which, inter alia, was subject to allowability of interest expenditure, which had not been considered while calculation of its taxable income by the A.O [i.e. bank interest : Rs. 4,51,36,210/- (+) bank charges : Rs. 3,34,448/-]; (III) that the A.O had wrongly observed that the income of the assessee firm for A.Y.2013-14 was determined @ 8% of its gross receipts vide his order passed u/s. 143(3) of the Act dated 19.12.2017 by losing sight of the fact that such estimation of income had thereafter been vacated by the Tribunal vide its order passed in ITA No.82/RPR/2018 dated 09.06.2022; (IV) that the A.O while estimating the income of the assessee firm had failed to place on record a comparable case of any similarly placed assessee; (V) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .05.2023 withdrawn its aforesaid "withdrawal letter" and had requested that the grounds of appeal be disposed of on merits. Also, the copy of the letter receipt register (relevant extract) evidencing filing of the aforesaid intimation/letter by the assessee firm on 12.05.2023 forming part of the aforesaid letter dated 29.10.2023 had been placed on our record. For the sake of clarity, the aforesaid letter dated 29.10.2023 is culled out as under: Considering the aforesaid admitted fact that the assessee firm had withdrawn its earlier letter wherein it had requested for withdrawal of its appeal, therefore, the additional grounds of appeal Nos.1 & 2 raised by the department are dismissed. 11. We shall now deal with the contentions advanced by the Ld. AR as regards the merits of the case, based on which he had tried to support the order of the CIT(Appeals). 12. Apropos the claim of the Ld. AR that the A.O in absence of pointing out any specific defect in its duly audited books of accounts, had grossly erred in rejecting the same under sub-section (3) to Section 145 of the Act, we are unable to concur with the same. Although it is a matter of fact borne from record that the A.O had fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to certain admissible- deductions and allowances on account of interest cost, depreciation allowance, partners interest and remuneration; that owing to exceptional and peculiar circumstances of the case- in the wake of impounded material and inability to explain the contents thereof with specific reference to the books of accounts, in order to buy peace cf. mind and avoid prod acted litigations, the income was declared at more than 8% of Gross Receipts in the Profit & Loss A/c as tabulated hereunder: letter and spirit, I in my capacity as partner of the film, hereby declare that the firm shall accept the assessment of income or our firm, if so made, by adopting 8% of gross receipts subject to allowance of deduction on account of interest cost including bank interest/finance charge/bank charges, recoveries by way of invocation of hank guarantee, depreciation, partner's remuneration and interest and that the firm shall not agitate the assessment so concluded in appeal or otherwise with a request that no penalty or prosecution proceedings under any provision a the Income Tax Act, 1961 or under any other law for the time being in force, shall be initiated against the firm or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with in an arbitrary and a whimsical manner and estimate the income of an assessee without any basis. As stated by Shri Veekaas S. Sharma, Ld. AR for the assessee firm, and rightly so, it is a matter of fact borne from record that Shri Sanjay Agrawal, partner of the assessee firm, in his statement recorded u/s. 131 of the Act dated 01.02.2016 had agreed that income of the assessee firm would be disclosed @8% of its gross receipt both for A.Y.2015-16 (i.e. the year under consideration) and A.Y.2016-17. On a perusal of the records, to which, our attention was drawn by the Ld. AR, we find that the A.O while assessing the income of the assessee firm for A.Y.2016-17 vide his order passed u/s. 143(3) dated 21.12.2018 had accepted its returned income as such. On perusal of the details, it transpires that the returned income of the assessee firm for A.Y.2016-17 worked out @ 2.19% of its gross receipts, which had been accepted by the A.O. On a careful perusal of the assessment order of the assessee firm for A.Y. 2016-17, we find that the A.O while framing the assessment had acted upon the directions received from the Addl. CIT, Range-1, Raipur u/s.144A of the Act. 15. As observed by us her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the aforesaid "chart" filed by the Ld. AR, the average NP rate of the aforementioned five preceding years/succeeding years had been worked out at 2.56%. For the sake of clarity, the aforesaid "chart" is culled out as under: The Ld. AR had though vehemently submitted that as observed by the CIT(Appeals), the books of accounts of the assessee firm in absence of pointing out of any specific defect by the A.O were not liable to be rejected u/s.145(3) of the Act, but alternatively, it was submitted by him that even if the book results of the assessee firm were not to be acted upon and its income after rejection of the books of account was to be estimated, then, considering the fact that the NP rate of 2.93% disclosed by the assessee firm during the year under consideration was higher than the average of the aforementioned five preceding years/succeeding years which had been assessed u/s. 143(3) of the Act, no adverse inference on the said count was called for in its case. 16. Having given a thoughtful consideration to the aforesaid contention of the Ld. AR, we principally concur with him. Admittedly, the A.O after rejecting the books of account of the assessee firm u/s. 145(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed NP rate of 2.93% during the year, i.e. A.Y.2015-16, which is higher than the average NP rate of 2.56% for the aforementioned preceding years/succeeding years, therefore, we are of the view that no adverse inferences as regards its returned income was liable to be drawn. However, as the aforesaid NP rates of the aforementioned five preceding years/succeeding years are not discernible from record; nor anything has been placed before us which would prove to the hilt the veracity of the same, therefore, the A.O is directed to verify the same while giving effect to our aforesaid observations. 18. We, thus, in terms of our aforesaid observations, though set aside the order of the CIT(Appeals) to the extent he had concurred with the claim of the assessee firm that its books of account in absence of pointing out of any specific defect were not liable to be rejected by the A.O u/s.145(3) of the Act, but at the same time, in terms of our aforesaid observations, principally concur with him to the extent he had vacated the addition made by the A.O and accepted the latter's returned income. 19. In the result, appeal of the revenue is partly allowed in terms of our aforesaid observati ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
