ACIT v. Amol Agarwal - Taxpublishers.in

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2016 TaxPub(DT) 0562 (Jod-Trib)div class=Section1> ACIT v. Amol Agarwal INCOME TAX ACT, 1961 --Accounting method--RejectionNo specific defect pointed out--The AO pointed out certain defects in the books of account and applied provisions of section 145(3). He estimated the net profit in the contract business of the assessee by applying a rate of 9% in both the years and thus made a trading addition in assessment years 2008-09 and 2010-11. In assessment year 2008-09, a further sum has been separately added in respect of interest, discount, share trading and sales tax refund. Likewise, in assessment year 2010-11, a further sum had been separately added in respect of these items, including income surrendered during survey. The assessee had also included the said income separately in Profit & Loss Account. In the appellate proceedings, the CIT(A) found that the defects pointed out by the AO were same as pointed out in assessment year 2009-10. The matter for assessment year 2009-10 traveled up to ITAT, and it was found that the application of provisions of section 145(3) were not justified looking at the nature of defects pointed out by the AO. He accordingly deleted the entire trading additions. *Held:* The provisions of section 145(3) had been applied on the basis of same reasons as considered by Tribunal in the assessee's case for assessment year 2009-10. Tribunal has dealt with the issue in detail in that order dated 25-9-2013. The facts and circumstances in these two years were same. The assessee continuoued to derive income from contractorship business and the manner of keeping the books of account was same. The books of account were audited and nothing had been pointed out to show different facts. The fact of surrender made during survey was separately considered by the assessee as well as by the AO while computing the income. Therefore, the fact of surrender of income could not be a reason for not accepting the income derived from the regular books of accounts. Specific defects are to be pointed out to reject the duly audited books of account. Accordingly, following Tribunal's own aforesaid order in the assessee's case for the assessment year 2009-10, the rejection of books of account was not justified in this case. The proceedings under section 263 in assessment year 2008-09 would also not make any difference for the reason that the CIT had not given any specific direction and the assessment order had also been made like regular assessment. The reasons/findings given in the assessment order were same as given in the assessment for the assessment year 2010-11. Therefore, the order of CIT(A) was upheld and grounds No. 1 to 4 of both the Revenue's appeals was rejected. Income Tax Act, 1961, Section 145(3) *REFERRED :* FAVOUR : In assessee's favour. A.Y. : 2008-09 & 2010-11 INCOME TAX ACT, 1961 --Business expenditre--AllowabilityWages -- Grounds in both the appeals were taken against deletion of disallowance of wages of Rs. 1,43,00,450 for assessment years 2008-09 and for 2010-11. The AO had found that the expenses were very high in the assessment years 2008-09 and 2010-11. Out of total wages, a sustantial amount was outstanding as at the end of assessment years 2008-09 and AY 2010-11. He observed that the address of payees was not available and most of the vouchers contained thumb impressions. The attendance of the labour was already printed in the attendance registers and supervisor had not signed the attendance register. He also observed that large amount of wages was outstanding which was 36.2 % of total wages in assessment year 2008-09 and 34.84 % of total wages in assessment year 2010-11. According to him, it was not possible to have such a huge wages outstanding. He considered outstanding wages of two months as reasonable and accordingly allowed the claim of wages to the extent of amount paid and outstanding wages of two months. The CIT(A) deleted the addition. *Held:* No such disallowance was made in assessment year 2009-10. Otherwise also, the AO pointed out certain defects regarding address of the labour, thumb impression, attendance record, but at the same time, he allowed the entire wages paid during the year and the outstanding wages for two months. As such, there appeared to be no nexus between the defects pointed out and the amount disallowed. It was also found that the only apprehension of AO as appeared from his order was about the huge outstanding wages and that too, only in respect of outstanding for a period of more than two months. The assessee furnished appropriate explanation giving reason for shortage of fund as considered by the CIT(A) in his order. Assessee also furnished details of payment of outstanding amount in the next year. In such facts and circumstances of the case, there was no reason to disagree with the view taken by the CIT(A). Accordingly, his order for both the years was upheld and ground No. 5 of both the departmental appeals was rejected. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 0562 (Jod-Trib)div class=Section1>

ACIT v. Amol Agarwal

INCOME TAX ACT, 1961

--Accounting method--RejectionNo specific defect pointed out--The AO pointed out certain defects in the books of account and applied provisions of section 145(3). He estimated the net profit in the contract business of the assessee by applying a rate of 9% in both the years and thus made a trading addition in assessment years 2008-09 and 2010-11. In assessment year 2008-09, a further sum has been separately added in respect of interest, discount, share trading and sales tax refund. Likewise, in assessment year 2010-11, a further sum had been separately added in respect of these items, including income surrendered during survey. The assessee had also included the said income separately in Profit & Loss Account. In the appellate proceedings, the CIT(A) found that the defects pointed out by the AO were same as pointed out in assessment year 2009-10. The matter for assessment year 2009-10 traveled up to ITAT, and it was found that the application of provisions of section 145(3) were not justified looking at the nature of defects pointed out by the AO. He accordingly deleted the entire trading additions. Held: The provisions of section 145(3) had been applied on the basis of same reasons as considered by Tribunal in the assessee's case for assessment year 2009-10. Tribunal has dealt with the issue in detail in that order dated 25-9-2013. The facts and circumstances in these two years were same. The assessee continuoued to derive income from contractorship business and the manner of keeping the books of account was same. The books of account were audited and nothing had been pointed out to show different facts. The fact of surrender made during survey was separately considered by the assessee as well as by the AO while computing the income. Therefore, the fact of surrender of income could not be a reason for not accepting the income derived from the regular books of accounts. Specific defects are to be pointed out to reject the duly audited books of account. Accordingly, following Tribunal's own aforesaid order in the assessee's case for the assessment year 2009-10, the rejection of books of account was not justified in this case. The proceedings under section 263 in assessment year 2008-09 would also not make any difference for the reason that the CIT had not given any specific direction and the assessment order had also been made like regular assessment. The reasons/findings given in the assessment order were same as given in the assessment for the assessment year 2010-11. Therefore, the order of CIT(A) was upheld and grounds No. 1 to 4 of both the Revenue's appeals was rejected.

Income Tax Act, 1961, Section 145(3)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09 & 2010-11

INCOME TAX ACT, 1961

--Business expenditre--AllowabilityWages -- Grounds in both the appeals were taken against deletion of disallowance of wages of Rs. 1,43,00,450 for assessment years 2008-09 and for 2010-11. The AO had found that the expenses were very high in the assessment years 2008-09 and 2010-11. Out of total wages, a sustantial amount was outstanding as at the end of assessment years 2008-09 and AY 2010-11. He observed that the address of payees was not available and most of the vouchers contained thumb impressions. The attendance of the labour was already printed in the attendance registers and supervisor had not signed the attendance register. He also observed that large amount of wages was outstanding which was 36.2 % of total wages in assessment year 2008-09 and 34.84 % of total wages in assessment year 2010-11. According to him, it was not possible to have such a huge wages outstanding. He considered outstanding wages of two months as reasonable and accordingly allowed the claim of wages to the extent of amount paid and outstanding wages of two months. The CIT(A) deleted the addition. Held: No such disallowance was made in assessment year 2009-10. Otherwise also, the AO pointed out certain defects regarding address of the labour, thumb impression, attendance record, but at the same time, he allowed the entire wages paid during the year and the outstanding wages for two months. As such, there appeared to be no nexus between the defects pointed out and the amount disallowed. It was also found that the only apprehension of AO as appeared from his order was about the huge outstanding wages and that too, only in respect of outstanding for a period of more than two months. The assessee furnished appropriate explanation giving reason for shortage of fund as considered by the CIT(A) in his order. Assessee also furnished details of payment of outstanding amount in the next year. In such facts and circumstances of the case, there was no reason to disagree with the view taken by the CIT(A). Accordingly, his order for both the years was upheld and ground No. 5 of both the departmental appeals was rejected.