2021 (10) TMI 1259 - AT - Income Tax

ITAT Upholds CIT(A) Decision on Income Estimation & Book of Account Rejection

The ITAT dismissed all revenue appeals, upholding the CIT(A)'s income estimation and book of account rejection under section 145(3) of the Act. The ... Deduction u/s. 80IC - Rejection of books of accounts - estimation of income - HELD THAT:- As pertaining to the discrepancies in the financials of the assessee and has also given the details depicted by way of various charts which reflects the profits of the assessee in the preceding years as well as the profits of other related concern of the same group which were operating in the same field and even in the same geographical area and has reasonably estimated the profit of the assessee company, which cannot be faulted as perverse. As already agreed with the decision of the Ld. CIT(A) rejecting the books of account, book results and invocation of the provision of section 145(3) of the Act while disposing of the assessee’s appeal - we do not find any infirmity in the order of the CIT(A) in estimating the income of the assessee. We note that from AY 2007-08 the assessee is eligible unit for deduction u/s. 80IC of the Act and, as discussed the estimation is made on the basis of relevant material and has been found by us to be reasonable in the facts and circumstances of the case. Therefore we uphold the impugned action of the Ld. CIT(A) giving partial relief to the assessee and also in the process confirming partly the action of AO. - Decided against revenue. Issues:- Disposal of appeals by the ITAT due to common grounds and identical facts.- Failure to notice the department's appeal during the assessee's appeal hearing.- Denial of deduction u/s. 80IC by the AO and estimation of gross profit rate at 14% by the CIT(A).- Confirmation of CIT(A)'s decision by the ITAT regarding the gross profit rate.- Upholding of CIT(A)'s estimation of income and rejection of books of account under section 145(3) of the Act.Issue 1: Disposal of appeals by the ITATThe Appellate Tribunal disposed of all appeals by the revenue against separate orders of the CIT(A) through a consolidated order due to common grounds and identical facts for AYs 2013-14 to 2015-16.Issue 2: Failure to notice department's appealIt was noted that the assessee's case was heard earlier by the Tribunal without realizing that the revenue had also filed an appeal against the CIT(A)'s order. The Tribunal confirmed the CIT(A)'s decision in the assessee's appeal without considering the revenue's appeal.Issue 3: Denial of deduction u/s. 80IC and estimation of gross profit rateThe AO denied the deduction u/s. 80IC claimed by the assessee for AY 2013-14 and made an addition to the income. The CIT(A) rejected the books of account and estimated the gross profit rate at 14%, differing from the rate disclosed by the assessee. The Tribunal confirmed the CIT(A)'s decision regarding the gross profit rate.Issue 4: Confirmation of CIT(A)'s decision on gross profit rateThe ITAT confirmed the CIT(A)'s decision on the gross profit rate for AYs 2014-15 and 2015-16, applying the same reasoning as in the earlier AY, and dismissed the appeals raised by the assessee.Issue 5: Upholding CIT(A)'s estimation of incomeThe ITAT upheld the CIT(A)'s estimation of income, rejecting the books of account under section 145(3) of the Act. The Tribunal found the estimation reasonable based on relevant material and upheld the partial relief given to the assessee, confirming partly the AO's action.In conclusion, the ITAT dismissed all the appeals of the revenue, upholding the CIT(A)'s estimation of income and the rejection of books of account under section 145(3) of the Act. The Tribunal found the CIT(A)'s decision reasonable and confirmed the gross profit rate, leading to the dismissal of all appeals.