2022 (5) TMI 439 - AT - Income Tax

Tribunal affirms CIT(A) decision on income additions, books rejection, and interest grant. Revenue appeal dismissed.

DCIT, Cir 4 (3) (1) Mumbai Mumbai Versus M/s. Jefferies India Pvt. Ltd.

The Tribunal upheld the CIT(A)'s decision on issues concerning the addition of estimated income and other income, rejection of books of accounts, and ... Rejection of books of accounts - substantially increase in the expenses - CIT-A deleting the addition on account of estimated income and other income in addition to the returned income - HELD THAT:- The appellant is a wholly owned subsidiary of a US entity and its books of accounts are duly audited. In the assessment year 2013-14 & 2014-15, the AO accepted the books results of the appellant in the assessment u/s 143(3) of the Act. The only reason which has been given by AO that there was substantially increase in the expenses, is not itself sufficient to reject the claim of the assessee. No specific reason of any kind was recorded. There is nothing on the file to which it can be assumed that on which grounds the books of account are not acceptable. CIT(A) asked the remand report from the AO but there was no plausible explanation to reject the claim of the assessee. The appellant had entered into an Advance Pricing Agreement (APA) with the Central Board of Direct Taxes for its transactions with associate Enterprises and this year is one of the rollback year in the APA already signed. The books of accounts and the financial result of appellant have already been examined and accepted that the APA. Nothing came into noticed to which it can be assumed that the finding of the CIT(A) is incorrect. The facts are not distinguishable at this stage. The finding no plausible explanation to interfere with the finding of the CIT(A), we are of the view that the finding of the CIT(A) is quite correct which is not liable to be interfered with at this appellate stage - Decided against revenue. Issues:1. Addition of estimated income and other income by CIT(A)2. Rejection of books of accounts by AO3. Failure of assessee to furnish details and books of accounts4. Grant of interest on refundAnalysis:Issue 1 - Addition of estimated income and other income by CIT(A):The Revenue appealed against the CIT(A) order deleting the addition of estimated income and other income. The AO rejected the books of accounts due to excessive expenses without proper justification. However, the CIT(A) found the AO's reasoning insufficient as the appellant's books had been accepted previously. The CIT(A) noted an increase in revenue and expenses compared to the previous year, rejecting the AO's findings. The Tribunal affirmed the CIT(A)'s decision, stating that the books had been audited and accepted in previous assessments, and there was no valid reason to reject them.Issue 2 - Rejection of books of accounts by AO:The AO rejected the books of accounts due to an increase in expenses without proper documentation. The CIT(A) found the rejection unjustified as the appellant's books had been accepted in previous assessments and were audited. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of specific reasons for rejecting the books and the absence of material changes to justify the rejection.Issue 3 - Failure of assessee to furnish details and books of accounts:The Revenue contended that the assessee failed to provide details and books of accounts during assessment proceedings. However, the CIT(A) found that the appellant had submitted all necessary information and books of accounts, which were acknowledged by the AO in the remand proceedings. The Tribunal upheld the CIT(A)'s decision, noting that the appellant had fulfilled the requirements during the assessment process.Issue 4 - Grant of interest on refund:The assessee raised objections regarding the grant of interest on refund, citing incorrect methodology and the failure to provide additional interest. The Tribunal did not address these objections as they were not pressed during arguments. Consequently, the appeal filed by the Revenue was dismissed, and the cross-objection by the assessee was partly allowed.In conclusion, the Tribunal upheld the CIT(A)'s decision on the issues related to the addition of estimated income and other income, rejection of books of accounts, and failure to furnish details and books of accounts. The objections regarding the grant of interest on refund were not addressed due to lack of arguments.