TaxTMI 
TaxTMI 
2013 (8) TMI 661
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....OF INCOME TAX (APPEALS)-XXI for the same. ii. Contrary documentary evidence provided for the same. iii. Hon'ble ITAT Delhi, order for the AY 05-06 provided for the same ground. 2. The Appellant prays that aforesaid disallowances be deleted. GROUND II: Disallowances on account of Expenses claimed to the tune of Rs 1,19,76,341/- 1. On the facts and in the circumstances of the case and in law, the COMMISSIONER OF INCOME TAX (APPEALS)-XXI erred in confirming the part disallowances of Rs. 1,19,76,341/- out of total of Rs. 4,79,05,364/-on adhoc basis at the rate of 5% of the total expenses claimed in profit and loss account merely on the basis that no books of accounts were produced without going into the facts of the case. COMMISSIONER OF INCOME TAX (APPEALS)-XXI rejected the stand of rule 46A for admission of additional evidence and upheld the stand to reject the books of account under section 145(3). COMMISSIONER OF INCOME TAX (APPEALS)-XXI confirmed the part addition out of total addition with t....
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.... year 2003-04. The AO has treated the expenses claimed by assessee on warranty relating to the claims lodged by customer which remain unverified as contingent one. Similarly the provision of warranty made by assessee in respect of goods sold prior to close of the year but the claim from the customer for defects were received subsequently as contingent one. The Ld. CIT(A) has deleted the disallowance and the Tribunal upheld the deletion. The Tribunal found that method of working out the expenses relatable to warranty of the assessee is a scientific method. The finding of the Tribunal recorded in para 6 read as under :- "6. We have considered the facts of the case and rival submissions. The decision of the jurisdictional High Court in the case of Vinitec Corporation Pvt. Ltd. (supra) is that a liability which has been incurred but is to be discharged at a future date is deductible in computing the income. It is not in dispute that the assessee has been giving warranty regarding the quality and the life of the cutting saws sold by it to the customers. It is also fact that many a time the warranty conditions are not satisfied and claims are made by the customers in this....
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.... the present case, from the assessment order, we observe that the Assessing Officer has observed that in AY 2005-06, a part of provisions for warranty was disallowed as being of contingent nature which was later allowed in appeal as discussed hereinabove. But the Assessing Officer further observed that the finding of this year is different and, therefore, not covered by the earlier years' orders and the Assessing Officer held that in this order, it is seen that the provisions as claimed as expenses in the Profit & loss account in the earlier year is again being claimed in P&L account in this year which reduced taxable profit to that extent. Therefore, he made a disallowance of Rs.30,92,037. In the impugned order, the Commissioner of Income Tax(A) accepted the contention of the assessee that there was a calculation mistake at the end of Assessing Officer and he partly deleted the addition by upholding another part of addition. 6. In the above factual position, we are of the view that the authorities below are expected to follow the principle of consistency in the light of orders passed by ITAT and first appellate authority in assessee's own case in earlier assessment years. As we....
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....counts u/s 145(3) of the Act because Assessing Officer was not satisfied about the correctness and completeness of the accounts of the assessee u/s 145(3) of the Act. The DR also submitted that the assessee has not furnished any cogent or acceptable reasons which prevented him by filing relevant evidence i.e. books of accounts before the Assessing Officer, therefore, the shelter of Rule 46A is not available for the assessee. Therefore, the Commissioner of Income Tax(A) rightly rejected the additional evidence and upheld the act of rejection of part books of accounts by the Assessing Officer. The DR supported the findings of the authorities below and finally submitted that ground no.2 of the assessee is also devoid of merits. 9. On careful consideration of the above rival submissions of both the parties and on perusal of record, we observe that admittedly the assessee company filed only journal of April, July, October, 2006 and March 2007 before the Assessing Officer and Assessing Officer rejected the books of accounts u/s 145(3) of the Act with an observation that the books of accounts are not properly maintained and in absence of complete ledger, cash book and vouchers, it is n....
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....dmit the Books of A/cs as additional evidence is devoid of any merit, on account of the willful non-compliance in the assessment proceedings. Therefore, the same is liable to be rejected. " 3.2 After considering the AO's remand report, notings in the order sheet, appellant's rejoinder, I came to the conclusion that this case does not fall under any exception of Rule 46A of the IT Act, 1962. In this regard, I place my reliance on citation of the Hon'ble Madras High Court in the case of CIT Vs. Subbu Shashank, 327 ITR 577, wherein, it has been held that it is the duty of the assessee to produce all evidence both oral and documentary before the AO. If the assessee is not able to produce the evidence or the witnesses before the AO, the CIT(A) has to satisfy himself about the reasonable cause shown by the assessee for not producing it before the assessing Officer and for placing it before the appellate authority for the first time. The relevant extract of the Hon'ble High Court judgment is reproduced hereunder:- "Held, allowing the appeal, that under rule 46A(3). the evidence produced by the assessee under rule 46A(l) could not be ....
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....we observe that admittedly, the books of accounts are necessary evidence for the assessment proceedings and the assessee is bound to cooperate with the Assessing Officer by submitting relevant evidence as per requirements of the Assessing Officer. In the present case, the Assessing Officer has specifically mentioned in the remand report that despite several opportunities to the assessee, the complete books of accounts, bills and vouchers related to the claim of expenses were not submitted by the assessee. The Assessing Officer made a disallowance of 20% of expenses on estimated basis on account of non-production of books of accounts, bills and vouchers despite affording adequate opportunity to the assessee for submission of the same. The Assessing Officer also made a contention in the remand report that the Assessing Officer has never refused to admit any evidence nor there was a position that the assessee is prevented by any sufficient cause for producing the evidence in spite of the fact that sufficient opportunities were granted to the assessee for submitting the evidence in question i.e. production of books of accounts, bills/vouchers. 12. From the impugned order, we observe....
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....ficer was not in dispute with the method of accounting followed by the assessee or compliance with the accounting standards prescribed under the IT Act. The only dispute which made him Invoke s. 145(3) was the assumption that the assessee's accounts were incomplete and incorrect. However, he could not substantiate anything to prove that its accounts were incomplete and incorrect." 14. In view of above contentions of the assessee, we observe that the revenue has not disputed the point that assessee is a limited company and its books of accounts have been duly audited by S.R. Batliboi & Associates and no adverse audit opinion has been given by them as to the maintenance of books of accounts. Furthermore, the Tax Audit Report of the appellant, which has been duly signed by S.R. Dinodia & Co. Chartered Accountant, reveals that the assessee company is maintaining books of accounts as per section 211 of the Companies Act, 1956 and section 145 of the Act. However, the Assessing Officer rejected the books of accounts by holding that the assessee's accounts were incomplete and incorrect without substantiating anything to prove that its accounts were incomplete and incorrect. Therefore, w....